Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and the Swiss Confederation

Baroness Fairhead Excerpts

Wednesday 1st May 2019 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, this has been a very good debate, and, not the first time, your Lordships’ House owes a considerable debt of gratitude to the EU Committee, and in particular to this sub-committee, for the hard work it has done in trying to bring together the arguments, the pluses and the minuses and the difficulties that we face in relation to this agreement. In addition, through this Motion today, my noble friend the chairman has been able to bring forward a much broader context within which we have to think harder about the processes and procedures we will need to have in place if we are not to repeat the mistakes that he has drawn to our attention today.

The regret in the Motion before us today is about the fact that the trade agreement that has been given to Parliament to consider does not have sufficient on services—all the arguments have been made clearly about that. However, in addition to the points about the specificity of services, is there not a slightly bigger worry behind all this? It must have been obvious to those negotiating on our behalf that, even though the figure of 80% of our economy may be different in practice, the relationship we have with Switzerland is based on a substantial volume of services activity.

If we have been unable to agree anything on services in this relationship, what does this say about our future ability to negotiate in a much broader context with all the countries of the EU, if we have to? What about the US and other countries for which our services, although valuable to us, may not stand in the same arrangement? Our failure to do it with a supportive friend—a country that has always been engaged with the UK—raises wider questions and leaves uncomfortable echoes for future arrangements.

When we look at the detail that the committee has pointed out, we see the omissions, changes, adjustments and disapplications. Although what we have today is a substantial document—my goodness it is; if those who have read it right through to the end are not concerned about how it distinguishes between the customs duties that will be applicable for gherkins, fresh or chilled, while aubergines go free, they are not doing their work, and I am glad someone else did it for me because I would have given up at that point, although it is quite late on—surely the issue here is that we are not getting what we think is the complete package. It is just a trade agreement, not the trade agreement that should be there. Therefore, my second worry is that we have been given something which is more to satisfy the vanity of those responsible for the department in relation to the promises given about the ability to do trade deals than it is about the specificity of our exporters and importers in relation to the country of Switzerland. That leaves me a little concerned.

The wider context of this is the question of scrutiny. Others have raised all the points and I do not need to go back through them again. We are still stuck trying to use 19th century resources and processes, relying on the royal prerogative, to try to take forward our treaties, when we need to replace them with a system that engages with the obvious interests in this House and the other place, the wider world and the devolved Administrations, to make sure that we can do something positive with our trade. That concept was debated at length on the Trade Bill, and I shall not go back over the issues. As has been pointed out, that Bill awaits Commons consideration of Lords amendments, but the irony is that if the Commons were willing to accept, at least in part, what has been put forward today—and we are certainly happy to talk about that—we would have a system that would set mandates, require Parliament to be kept abreast of developments and changes in the negotiations and recommend whether Parliament itself should ratify the end conclusion.

The Minister may reflect on the following question when she responds. If our EU Committee—or whatever committee structure is set up in future—had been given the chance to look at the mandate for this trade agreement and given periodic reviews of the discussions and debate and had the power to recommend whether it should be ratified, would we really be in such a mess on this issue as we are?

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, I thank the noble Lord, Lord Whitty, for drawing the House’s attention to the UK-Switzerland continuity trade agreement. I add my thanks to him and the committee for their work. Just to read a synopsis of the report shows how much work has gone into this one agreement, so we owe a genuine debt of gratitude.

I also thank all your Lordships for contributing to this debate, which has been insightful and challenging. I welcome this debate and informed discussion about some of the details raised. As I understand it, the Motion did not engage the process under the CRaG Act, but I am keen to address the questions that have been put.

As for the committee’s detailed examination, I am thankful to the noble Earl, Lord Kinnoull, for saying how helpful DIT and other officials have been. I will definitely take that back because that is how this has to work. The report created complements the explanatory materials we have, and will continue to, put alongside the agreements.

--- Later in debate ---

[Baroness Fairhead]

I am happy to deal with that. I was given the wrong information that I had two minutes left in which to sum up. I apologise: I rushed through, rather.

We share the text when it is in a stable form; it goes to the devolved Administrations at the same time as it goes to Ministers. We realise that we have to work with the devolved Administrations. We offer briefing sessions on the continuity agreements, and I believe there is ongoing dialogue at official level. For future trade agreements, we are working with the devolved Administrations on a concordat, and that is, I think, progressing.

I can now say what I was going to say to the noble Baronesses, Lady Armstrong and Lady Donaghy, about the need for any future agreements to take into account civic society, trade unions, businesses and consumers. That is part of the consultation process. We also have the strategic trade advisory group. We are trying to make sure that there is a broader discussion on future trade agreements.

[Lord Purvis of Tweed]

I promise I will not take up the Minister’s extra time with other interventions, but I would like some clarity. She referred to ongoing and future consultation on agreements, but the questions asked were about this agreement and this treaty. What was the extent of the consultation with the devolved Administrations on this treaty?

[Baroness Fairhead]

My understanding is that there were conversations at official level. After the debate in this House, we made a change and shared the full text of the agreement. For all agreements in place from 20 March, they will get the full text of the treaty. Prior to that, we gave them the text when it was initialled in draft form. We are learning as we go through this process, and fully understand the importance of that involvement.

[Lord Whitty]

My Lords, I thank the Minister very much for her comprehensive reply, and underline my thanks to her officials for taking us through this process.

I do not intend to keep the House much longer; I have already indicated that I will not move this Motion to a vote. I thank everybody who has taken part in the debate. It indicates that, while this may be an umbrella agreement—and the Government clearly needed to provide a degree of continuity with what is, I repeat, our third-largest non-EU trading partner, and mainly in high-value trade—we need to ensure that the holes in that umbrella are rapidly filled, particularly in relation to the whole range of service industries, as noble Lords have raised.

Hardly anyone has disagreed with the findings on the Swiss treaty. The most wounding disagreement came from the noble Lord, Lord Kerr, who, in effect, said that we are being far too optimistic about potential future trilateral arrangements with the EU. Of course he is right—and that is the difficulty. It demonstrates that unless we can reach accommodation with the EU, the arrangements with Switzerland will be more difficult.

It will be even more difficult with the other big trade treaties. A great deal of reference has been made to the good will of both parties on this treaty, but it will not be so easy with Japan and many other countries. Unless they are played against the background of a positive arrangement with the EU, they will run into difficulties. This provides for no deal, but we hope that we will not be in that situation and will move to a broad understanding with the EU. However, if we do not, those problems will undoubtedly arise.

On the wider problem of scrutiny, Parliament has to take a decision and I am glad that the Minister has indicated that the Government are thinking about it. The noble Lord, Lord Robathan, is right that in the past Parliament did not get much involved in these matters or in treaties as a whole. However, since 2010 it has begun to get involved in treaties but, as far as trade treaties are concerned, until we leave that is a matter for the EU. The point I am making is that parliamentary scrutiny was at the EU level. It was not that the noble Lord, Lord Robathan, was asleep in the House of Commons when treaties were considered—not on that occasion anyway—but that they received the detailed involvement of the European Parliament, in a way similar to Congress’s involvement in trade agreements in the United States, as the noble Lord, Lord Kerr, pointed out.

That had the benefit of allowing time and interface with the devolved Administrations and civic society as a whole. That is the way in which we will have to approach the future pattern of our trade—not long-term continuity arrangements—and it will involve a profound rethinking of the role of Parliament in that respect. For all the reasons the Minister has just adduced, we will return to that issue. This treaty demonstrates the need for that. It also demonstrates the shortcomings of simply trying to roll over and the fact that this House and Parliament as a whole will have to return to these issues in short order—particularly if, regrettably, there is no deal. I beg leave to withdraw my Motion.

UK Export Finance: Expenditure

Baroness Fairhead Excerpts

Wednesday 27th March 2019 Lords Chamber

[Baroness Sheehan]

To ask Her Majesty’s Government what proportion of UK Export Finance’s expenditure on support for energy production was spent on (1) fossil fuels, and (2) renewables, in (a) 2015, (b) 2016, and (c) 2017.

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, UK Export Finance’s support is available for UK exporters in all sectors and its provision of support is demand-led. UKEF support for energy-related exports in 2015-16 through 2017-18 respectively was as follows: 99%, 97%, and 72% to fossil fuels, and 1%, 3% and 28% to renewable energies. It supported around 0.2% of the global annual investment in oil and gas in 2016. The support has helped to sustain UK jobs in a sector that employs over 300,000 in highly skilled work and is essential to our energy security. We recognise that climate change is a key issue for the world and it remains a high issue for UKEF, but support can be provided only where there is insufficient in the private market and at the moment there is significant liquidity there.

[Baroness Sheehan (LD)]

I thank the Minister for her reply. Will she acknowledge that there is a huge inconsistency between the Government’s international climate commitments, such as the Paris agreement, the UN SDGs, the G7, the G20, the EU—the list is very long—and the general support for fossil fuel production? Does she also agree that by providing billions to the enormously wealthy oil and gas industry while giving crumbs to the renewable industry, the UK Government are backing the wrong technologies and locking developing countries into decades of fossil fuel use which we will have to abandon if we are going to treat catastrophic weather events, such as cyclone Idai, with the urgency that the thousands of schoolchildren taking to our streets are demanding?

[Baroness Fairhead]

I cannot agree that it is inconsistent. Even the IPCC report states that there is a climate change imperative but that fossil fuels—oil and gas—will continue to be a significant part of our energy requirement and will require continued investment. The key is to make sure that that transformation and pivot towards cleaner energy is appropriate.

[Lord West of Spithead (Lab)]

Is it still government policy that one-third of the nation’s future energy supply should be provided by nuclear? If that is the case, how are the Government going to resolve the almost complete breakdown in the development of new civil reactors for the future?

[Baroness Fairhead]

I can confirm that it is. I think the civil nuclear capability target is around 20%. There are major projects, but there are also opportunities in small modular nuclear reactors. On renewables, it is important that we are building up capability in a number of renewable sectors. The challenge for this country is that we have very few prime contractors in offshore wind, although we have many in the supply train. We are trying to make sure that the supply train goes through.

[Lord Krebs (CB)]

My Lords, the Minister referred to the latest IPCC report, published in October last year, which recommended that global carbon dioxide emissions should be reduced by 45% by 2030 and that by 2050 the world should be carbon neutral if we are to avoid dangerous climate change. Can the Minister reassure the House that the investments to which she referred in answer to the noble Baroness, Lady Sheehan, are consistent with the IPCC’s recommended targets?

[Baroness Fairhead]

I can confirm that we reply to demand from these sectors and that we focus on renewables. We have hired renewables experts. We are trying to move towards cleaner forms of fossil fuels, for example, in the $400 million project in Ghana to reduce the dependency on oil. That is a key part of achieving those objectives.

[Lord Howell of Guildford (Con)]

Given the unwelcome fact of the continuing preponderance of coal burning for electricity throughout Asia, with new coal plants being built all the time, should not the most useful export finance support go to encouraging clean coal technology and carbon capture and storage if we are really serious about reducing emissions rather than just feeling good?

[Baroness Fairhead]

I agree with my noble friend. We have taken the lead on coal-fired power stations. As the House will be aware, we have agreed, on a multilateral basis, only the most extreme exceptional circumstances for any new coal-fired power stations. We have taken the lead on that. We have asked UKEF to be part of the Steering Committee of the Equator Principles. The last time we supported a new coal-fired power station overseas was in 2002.

[Lord Grantchester (Lab)]

My Lords, in terms of taking leadership on energy production, does the Minister agree that it is now time to recognise that underwriting exports on a return-on-capital basis is no longer sufficient and that consideration should be given to social and environmental effects and benefits?

[Baroness Fairhead]

My Lords, we absolutely have regard to those things. All our projects are rigorously assessed according to the common approaches of the OECD and the Equator Principles—the environmental, social and human rights aspects. We rigorously follow all the international guidelines, which include making sure that people stay safe in those nations, as well as having regard to human rights.

[Lord Teverson (LD)]

My Lords, is it not the case that things work really well for developing countries when there is not high infrastructure investment? Moving straight to mobile phones was a good example of that. Fossil fuels generally require high levels of infrastructure and networks, whereas clean energy is distributed and works far better for developing countries and economies. Should that not be another reason for concentrating more on clean rather than fossil fuel technologies?

[Baroness Fairhead]

My Lords, this Government are concentrating on building growth based on clean technologies, and our support for offshore wind is one obvious example. In terms of what is appropriate for each country, it is for them to decide how they meet their Paris commitments—for example, the trans- formational project in Ghana, in which we were involved, reduced its dependency on oil. In this transformational part of our journey towards the climate change agenda, we need as far as possible to move to cleaner forms of energy production, and, as the noble Lord will be aware, gas is significantly cleaner than oil.

Trade etc. in Dual-Use Items and Firearms etc. (Amendment) (EU Exit) Regulations 2019

Baroness Fairhead Excerpts

Tuesday 26th March 2019 Lords Chamber

Moved by

[Baroness Fairhead]

That the draft Regulations laid before the House on 4 March be approved.

Relevant document: 53rd Report from the Joint Committee on Statutory Instruments (Special attention drawn to the instrument)

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, I am pleased to open this debate on the Trade etc. in Dual-Use Items and Firearms etc. (Amendment) (EU Exit) Regulations 2019. These regulations do a very serious job. Without them, existing European Union law will not be effective in UK domestic law on the day we exit the EU, a vital part of our long-term planning since Royal Assent of the European Union (Withdrawal) Act.

The regulations include amendments that will allow the UK to maintain those EU laws that control exports of items with both military and civil uses. They will control the export of civilian firearms of the type used by hunters and sports shooters. If we do not retain and amend this legislation, we will no longer control the export of such potentially dangerous items. This will put the United Kingdom in breach of international agreements which require we impose these controls and which prevent military equipment falling into the hands of those who intend this country harm. They also prevent or disrupt the proliferation of nuclear and chemical weapons and play a key part in promoting global security by controlling the strategic goods that leave our shores.

The exit-related legislation provides the necessary legislative building blocks to ensure readiness on exit day. The EU withdrawal Act enables a functioning statute book on exit day by providing Ministers with the tools to deal with deficiencies in domestic law arising as a result of our exit from the EU, so it is right and proper that we use it for matters such as export controls.

By making this regulation and the associated Export Control (Amendment) (EU Exit) Regulations 2019, the department will have completed much of the legislative part of controlling the export of strategic goods in preparation for a no-deal Brexit. If this regulation is no longer required on exit day, we would expect to revoke or end it. Alternatively, commencement could be deferred to the end of an implementation period.

Broadly, all the provisions applying to exports from the EU customs territory today will instead apply to exports from the UK. However, leaving the EU will mean that the rules will have to change, and we cannot guarantee that all the export licensing requirements that UK exporters are familiar with will remain the same. For this reason, the Government have made every effort to provide certainty for businesses and the public wherever possible. We have published a new general export licence, which provides for the export of dual-use items to all European Union member states and the Channel Islands. In August, we published a technical notice on export controls, which explained our plans for post-EU exit export control licensing. We have also included EU exit advice, both in the export control training programme and at the annual export control symposium, as well as giving extensive advice to key sector trade associations.

The House should be aware that the Joint Committee on Statutory Instruments has reported the draft regulations on the grounds that they require elucidation in one respect and were defectively drafted in three respects. On the first point, we provided the committee with an explanation of why the transfer of technology by electronic means to the Isle of Man is considered to be an export whereas the physical movement of goods is not. This is a consequence of our customs arrangements with the Isle of Man and is consistent with our controls on military goods and technology. On the other three points raised by the Joint Committee, we have acknowledged that these are drafting errors that we will correct in the near future by laying a further SI, which corrects the drafting. We are very grateful for the diligent work of the committee, and I am happy to confirm that none of those errors affects the proper functioning of the regulations.

I hope that this House will work in the interests of our nation to ensure the passage of this legislation, which we believe is essential to ensuring that we are prepared for EU exit. I beg to move.

--- Later in debate ---

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am again grateful to the Minister for her comprehensive introduction to this SI. I follow the noble Lord, Lord Purvis, on a number of points and look forward to the responses to them.

I was puzzled by why the version of the SI that we have is not the corrected version, but I think time has probably defeated us on that. I look forward to seeing the final version when it comes out. Having to rerun this debate so quickly might be a little otiose, but it is always a pleasure to have these debates.

My question is slightly broader, and it may be better answered in a letter. The SI concerns the need to amend domestic and directly applicable EU legislation so that it continues to function in relation to the way in which these types of weapons are exported. I could not pick up from what the Minister said—this is why I suggest she might write to us—where this fits into the broader system we set up in early 2000 to try to make sure that exports of weapons as weapons are properly controlled. At that stage it involved three departments of state, but it presumably now involves four. Who has control of that? Are those systems fully operational, and is there any issue there? In a sense, I am confident that there is not, but there is growing concern about the way in which weapons have been used in certain areas. Rather than being used in genuine defence situations, they appear to have been used in internal conflicts and in other scenarios, which was never intended. Therefore, the problem might be that the dual-use material here might also fall into that category, and I wonder whether the Minister can confirm that the broad structure that is there to protect exporters but also to protect our own systems will apply. If so, exactly how will that work in practice?

Secondly, on the same theme, the Explanatory Memorandum makes relatively light work of the new pro forma licences that will be available in the UK to deal with these goods. I do not need a detailed response tonight but I would be interested to know a little more about how these will work in practice. “Pro forma” can be shorthand for not requesting a very detailed exposition from the exporter. I hope that that is not the case. I assume that pro forma means that the licences will be pre-printed and relatively easy to fill in, but I would be grateful to have confirmation of that. What is the system? Where do they go? What are we looking for here? Are these materials are being created under a very deep cut through the system? Will the system track back over rules of origin? Will we be clear where they originated from and where their final destination is likely to be? Presumably all those things will be in a system at some point. Will they be clearly written up and submitted properly, and, if so, to whom, and will they cover all the points that I have made?

[Baroness Fairhead]

My Lords, I shall try to address the questions directly. Turning to the concern raised by the noble Lord, Lord Purvis of Tweed, I can confirm that controls will apply to cyber capability materials when they are exported to the Isle of Man.

[Lord Purvis of Tweed]

Part of my point was about exports from, rather than to, the Isle of Man. Currently I am unaware of the Isle of Man taking a very aggressive stance against the rest of the United Kingdom on cyber capability. However, I was anxious about any part of the United Kingdom or the Isle of Man being used for exports to other states. Therefore, it is not only a question of exports from the United Kingdom to the Isle of Man; it is a question of the Isle of Man being the basis for exports from the United Kingdom.

[Baroness Fairhead]

There are two points that I would like to raise on cyber capability, and to some extent they will also address the process that the noble Lord, Lord Stevenson of Balmacara, asked about. There will be an open pro forma licence for materials going to what we consider to be low-risk territories—that is, the EU. Where there will be a change is if the products go into the EU and are then exported from the EU to another part of the world. Cyber and cryptographic goods are an area that we are taking increasingly seriously. The noble Lord, Lord Purvis, mentioned some of the open general export licences, but only those absolutely consistent with our consolidated criteria are included. All high-risk capabilities are deliberately excluded. As your Lordships will know, the controls on cryptography come from the Wassenaar agreement. There are various agreements that we comply with. The EU Parliament has suggested removing regulation from dual use, but we believe that we have international obligations to implement the controls and we do not agree with that. To be absolutely clear about cyber surveillance, which I believe is a key concern in the work that the noble Lord is doing, cyber surveillance equipment is not included in the open licence.

Regarding the more general impact of our exit on future co-operation with the EU, we absolutely recognise the importance of maintaining close co-operation and hope it will be a key part of the negotiation on our future partnership with the EU.

The noble Lord, Lord Stevenson of Balmacara, raised a subject that is probably for another day. I can just give some reassurance that the Export Control Joint Unit has been created with the Ministry of Defence, the Foreign Office and DIT. DIT is essentially the regulator; the other two departments provide their input, advice and challenge. The unit is established and populated. It is a very important subject but, as I said, one for another day.

I think we all agree that it is critically important that we maintain robust strategic export controls, to fulfil our international obligations and to keep the world safe. I hope that I have been clear about the Government’s commitments to this regulation. I finish by reiterating a key point of my opening statement: that if we do not retain and amend this EU legislation, we will no longer control the export of dual-use goods or firearms. We have a responsibility to ensure the security and safety of our people, and this legislation supports that objective. I commend this Motion to the House.

Motion agreed.

Cat and Dog Fur (Control of Import, Export and Placing on the Market) (Amendment) (EU Exit) Regulations 2019

Baroness Fairhead Excerpts

Tuesday 26th March 2019 Lords Chamber

Moved by

[Baroness Fairhead]

That the draft Regulations laid before the House on 4 March be approved.

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, the regulations are necessary to maintain the ban on trade in cat and dog fur following the UK’s withdrawal from the European Union. We recognise the strength of feeling in the UK against a trade that could encourage killing cats and dogs to make money out of their fur. The regulations are most certainly needed to continue to meet the public’s expectations. Without them, the legislation imposing the ban would be inoperable.

The regulations were laid before Parliament on 4 March. They are made under powers in the EU withdrawal Act 2018. Noble Lords will know that, given the context, those powers are limited and allow only the correction of technical deficiencies in existing EU law that, by the operation of the Act, will be retained in UK law following withdrawal. The regulations correct such deficiencies, for example by replacing references to the EU and its institutions with the appropriate UK references.

To be clear, such powers cannot make policy changes. I add that it is beyond the scope of the regulations and today’s debate to consider wider changes to the ways in which animals with fur, and indeed other creatures, are protected. This is about ensuring continuity and making sure that the legislation is operable. To ensure that the ban on trade in cat or dog fur is maintained, I commend these regulations to the House.

[Lord Purvis of Tweed (LD)]

My Lords, if we are to leave the European Union and crash out in a way I consider disastrous, a degree of legal certainty is necessary for some of the areas where protection for animals is provided. Indeed, the Minister will recall that this specific example was raised in the Trade Bill.

I welcome putting this mechanism in place to ensure that there are no gaps in this heinous trade, which British criminal proceedings established as a crime more than a decade ago. I also welcome the high penalties for this crime being maintained. In doing so, I wonder whether the Minister can address a few points of clarification. It is important to note that the Government’s Explanatory Memorandum highlighted the fact that the European Commission found little evidence of trade in this area. Nevertheless, regrettably, if those in the criminal fraternity see an opportunity or an opening, they are likely to exploit it.

With that caveat, I ask for further explanation on the instrument. Its existing power to derogate, contained in the EC regulation, will be transferred to the Secretary of State. The Minister said that this measure would not be a vehicle for making new policy, but this power would provide Ministers with the ability to derogate. Where will potential derogations occur? If they have already been highlighted for educational or taxidermy purposes, are those purposes defined in current legislation? I know through my links with the textile and fashion industry in Scotland and across the UK that, regrettably, companies could set themselves up as taxidermy companies to exploit a loophole. Clarification from the Government on that point would be very welcome.

The second area was that the current approach, as the Explanatory Memorandum states,

“allows the European Commission to adopt an analytical method to identify different species of fur”,

and, if necessary, to amend on that basis. This will now be a power of the Secretary of State, so how will the Government consider this analytical method for considering which species are covered by this regulation?

My final point relates to the devolved Administrations, which I am sure the Minister will not be surprised about. While this will be considered as part of a reserved power—I have no dispute about that—inevitably there has been an interaction with devolved Administrations. When I served in the Scottish Parliament there were proposals for legislation to ban puppy farming and the consequential element of what would potentially become a product from that puppy farming. Indeed, legislation exists in Scotland on other wild animals and the pelts derived from them. If the Minister were able to clarify what discussions the Government have had—primarily in Scotland, which has some complementary areas of primary legislation in this area—it would be most welcome.

[Lord Stevenson of Balmacara (Lab)]

My Lords, the Minister brought forward a well-argued and brief case, and there is no need for us to go over much of the ground here. This is a very straightforward translation across of an existing power, and it is obviously necessary. These bans are only there because of public indignation and moral outcry about the trade in fur products, with particular reference to cats and dogs in this case.

However, as the noble Lord, Lord Purvis, said, there is a wider context, and it would be helpful to have some sense of where this lies in the thinking on the broader trade in live puppies—and presumably cats—which are brought in to the great distress of the animals concerned, with poor standards of veterinary care and often with misleading information about what breeds they are and their likely state of health. There is also the broader question about how these issues are to be policed.

Mention is made in the commentary around this statutory instrument that determining the quality of the fur is complicated by the fact that it is sometimes quite difficult to track exactly what it is and where it has come from. More work needs to be done on that, and I wonder whether more effort will be placed on this now that the matter is being brought into direct control from the UK. That broader question also leads to the point about whether resources are available to make sure that it is properly policed. Presumably this is a trading standards issue. Trading standards is often asked to take on additional burdens and rarely given additional resources, since its funding comes from local authorities. I would be grateful if the Minister could confirm that there will be adequate resources for this work to be carried out.

[Baroness Fairhead]

My Lords, I will try to address a number of the concerns raised. The noble Lords, Lord Stevenson of Balmacara and Lord Purvis of Tweed, both mentioned a broader, more extensive ban. There may be time another day to talk about extending the ban. There have been no challenges to this ban under WTO rules. Our position is that that is beyond the scope of this statutory instrument, and therefore it is not a subject for discussion today.

There is a power to derogate in the current regulations. Because we are required only to correct technical deficiencies and because it exists, removing it would amount to more than correcting a technical deficiency. The power is there so that it is appropriate to bestow it on the UK. But let me be absolutely clear here on the Floor of the House—and this is why I am not going to address the other detailed questions of the noble Lord, Lord Purvis—that the Government have no plans to use that power. As the noble Lord said, the derogation is for education and taxidermy. We have no plans to make use of that power.

The noble Lord, Lord Purvis, asked about the use of specific analytical methods. The requirement to report was to the Commission. We no longer need to do that, because we can determine what analytical methods we use. As the UK uses DNA-based methodology, we consider that to be the most appropriate overall and expect to continue to use it.

On the agreement of the devolved Administrations, it is recorded in the Explanatory Memorandum to the 2008 regulations on this subject that this is a reserved matter. The international trade regulation falls within the general reservation for international affairs set out in the Scotland Act 1998. We have shared these regulations with the devolved Administrations in draft, and, in practical terms, we are confident that there is consensus across the UK on the desirability of maintaining the ban.

I can confirm to both noble Lords who have spoken that we expect these regulations to continue to be rigorously enforced. HMRC will continue its role. It inspects consignments of fur at the point of entry into or exit from the UK, and on retail premises, to ensure they do not contain any cat or dog fur. It will retain its existing power to seize goods it considers to be in breach. It can also bring criminal proceedings against any persons found to have breached the prohibitions.

With that, I hope I have addressed the noble Lords’ questions.

[Lord Purvis of Tweed]

One might assume that this is an area where, if the border with the European Union is in Northern Ireland, capacity will have to be in place to ensure there is no opportunity for the importation of illegal goods through that border. How do the Government intend to ensure that the checks that the Minister said will be required, and that it is the Government’s intention to carry out, will take place at the Northern Ireland border?

[Baroness Fairhead]

I will have to write to the noble Lord on that point; I do not have the specifics of how it will be managed. It is important we maintain these prohibitions, and the country believes that too. I commend the regulations to the House.

Motion agreed.

Protecting Against the Effects of the Extraterritorial Application of Third Country Legislation (Amendment) (EU Exit) Regulations 2019

Baroness Fairhead Excerpts

Tuesday 26th March 2019 Lords Chamber

Moved by

[Baroness Fairhead]

That the draft Regulations laid before the House on 7 March be approved.

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, EU Council regulation 2271/96, which protects,

“against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom”,

is commonly known as the EU blocking regulation. It seeks to protect UK and EU businesses from the harmful effects of the extraterritorial application of legislation adopted by another country.

Extraterritorial application of legislation refers to a situation where a country has enacted certain laws, regulations and other legislative instruments which purport to regulate activities of natural and legal persons outside its jurisdiction who are not its citizens or legal persons incorporated in that jurisdiction. This could, for example, result in penalties against a UK citizen for carrying out activities in the UK which we consider to be fully legitimate under our law. The UK and EU have long opposed the extraterritorial effect of sanctions legislation on our businesses and the dissuasive impact that this can have on legitimate trade. In fact, the UK’s opposition to such actions predates the blocking regulation. We have had regulations on our statute book since 1980.

The blocking regulation seeks to protect UK businesses in two key ways. First, Article 4 of that regulation guarantees that courts in EU member states will not recognise or allow the enforcement of judgments against EU businesses for fines that they incur in a third country for breaching sanctions with extraterritorial effect. Secondly, its Article 6 enables businesses to seek damages through the courts in any member states, should they be negatively impacted by the application of extraterritorial legislation in scope of the regulation.

Of course, there may be occasions where compliance with third-country sanctions regimes is necessary. Where these instances arise, the EU has the power to issue authorisations for businesses to comply with third-party sanctions regimes. Such compliance can include seeking permission from a third country to continue doing business with countries affected by that third country’s sanctions, such as approaching OFAC for a licence to continue operating in Iran. This form of compliance preserves and increases trade, although without such authorisation it is technically illegal under the blocking regulation. For this reason, compliance authorisations may need to be issued by Her Majesty’s Government after Brexit. Currently, requests for such authorisations are considered by the EU Commission in accordance with the process and criteria set out in Commission implementing regulation 2018/1101 of 3 August 2018, referred to as the implementing regulation.

This SI amends the blocking regulation and the implementing regulation as retained in UK law, using powers under Section 8 of, and paragraph 21(b) of Schedule 7 to, the EU withdrawal Act 2018, and fixes it for the UK-only context. It ensures that the UK statute book on leaving day remains equivalent to that on the day before we leave. The SI, generally speaking, transfers the functions of the European Commission to the Secretary of State, as would be expected of SIs made under the EU withdrawal Act 2018. For instance, once the SI enters into force, UK businesses will be able to apply to the Secretary of State for permission to comply with extraterritorial sanctions, and the Secretary of State will be able to grant this permission if he or she judges the application to be consistent with the criteria set out in legislation.

Currently, the Commission defines the scope of the blocking regulation—which specific pieces of legislation it applies to—through tertiary legislation amending and updating the annexe to the blocking regulation. The SI transfers this power to the Secretary of State through the mechanism of laying of a negative SI. As we leave the EU we must ensure that we continue to protect UK businesses from the effect of extraterritorial legislation. We firmly believe that our operators should be able to continue legitimate trade free from the harmful effects of the extraterritoriality that we consider illegal under international law. This statutory instrument is a key part of this policy stance and is particularly relevant given our foreign and trade policy stances on Cuba and Iran. I welcome the opportunity for scrutiny of it and I look forward to hearing the contributions of noble Lords.

[Lord Purvis of Tweed (LD)]

My Lords, I do not think there will be any difficulty on these Benches about ensuring the continuity we will require in order that there is certainty for British businesses that they can operate on the correct side of international law. The only areas that I hope the Minister will clarify—her introductory remarks were quite helpful—concern, first, the application process that will be required if we are to have a stand-alone position outside European regulations. The applications for authorisations will have to be made to the Secretary of State, as the regulations state. Will the Minister indicate what process such applications will involve?

The second area, which the noble Baroness will not be surprised that I raise, concerns the matter of another judiciary within the United Kingdom. While, as part of Scottish criminal law, this will be a reserved power, nevertheless the criminal penalties that may well apply on the potential breach of some of these things by Scottish businesses would have to be prosecuted by the Scottish courts. One of the examples the Minister raised, that of Iran, is very relevant for the very large Scottish oil and gas industry that trades across the whole region, including within Iran. It is a relevant point, given the not-so-subtle threats from the United States that it will consider breach of its sanctions policy by those British businesses that continue to trade with Iran under a perfectly legal framework. If we are to have a stand-alone approach, absolute certainty, clarity and reassurance would be very helpful. The Government indicated that no consultation was necessary in bringing forward the statutory instrument. I was slightly surprised about that, given that we have two distinct judicial systems in the UK.

The Government also indicated that before the UK leaves the EU, guidance on how a blocking regulation would apply to the UK would be published. Given that when this instrument was drafted the intention was that, potentially, we would leave on Friday without an agreement, can the Minister say whether this guidance has been published? If it has not, when will it be, to offer that reassurance?

Finally, the Explanatory Memorandum states:

“The Blocking Regulation currently provides that the Commission is to regularly report on the effects of the extraterritorial third country legislation. This will become a requirement on the part of the Secretary of State in the retained version”.


Through what mechanism do the Government intend to do that? Will it be through Written Statements to Parliament, or will a public document be laid before Parliament to provide that transparency? I hope that the Minister can clarify all those aspects.

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[Baroness Fairhead]

I thank noble Lords for their contributions in this short but useful debate. I hope I have been clear about the Government’s commitment to the continuation of these regulations. To address the point made by the noble Lord, Lord Stevenson of Balmacara, about why we are doing this, we believe that if we do not retain and amend this legislation, we will no longer be able to offer protection to UK businesses from the harmful effects we consider to be illegal under international law. We would in effect be acknowledging the superiority of the sanctions regime of a third country relative to our own. Successive Governments since the 1980s have agreed that this is unacceptable and our Government is no exception.

The noble Lord, Lord Stevenson, also highlighted some of the real challenges of these regulations. Yes, they provide protection, but there is also a challenge for companies who find themselves in that spot between being blocked from complying and failing to comply, and therefore being in breach of sanctions. This instrument is not a perfect solution. In application it is probably to be used more as a tool to dissuade companies and individuals from complying with extraterritorial sanctions. In terms of usage, only about 14 applications have been received by the Commission. I hope that answers the hard point of the questions.

The noble Lord, Lord Purvis of Tweed, asked some questions about the application process for the exemptions. At the moment businesses apply to the European Commission for exemptions; we will try to make that a bit more straightforward by providing a dedicated mailbox for our businesses to apply for exemptions once the SI enters into force. We hope that that will be a much more readily accessible approach.

On the question of when guidance will be published, over the coming months we will start with the EU guidance and update it to make sure that it complies with the UK context.

In terms of the devolved Administrations, I think that the noble Lord, Lord Purvis, acknowledged that this is a reserved power. We have kept the devolved Administrations informed of the policy on this matter and have sent them the Explanatory Memorandum. In terms of criminal proceedings in Scotland, this has been permitted under the 1996 order, so I hope that that is relatively straightforward.

My final response is to the noble Lord, Lord Stevenson. He asked how this fits in with current foreign policy with regard to Iran in particular. There are sanctions that we support against Iran. However, as I have said before to the House, we believe that the Joint Comprehensive Plan of Action is the best plan to make sure that we prevent Iran obtaining nuclear weapons. We believe that protecting trade with Iran, supported by this blocking regulation, is important to show that we are committed to legitimate trading with Iran. We are firm believers in the importance of the JCPOA.

[Lord Stevenson of Balmacara]

I am sorry to interrupt the Minister’s flow and I am grateful to her for giving way. I was trying to make a slightly different point, which is not the broader case about the JCPOA but on the British national currently held in detention in Iran for whom diplomatic efforts have been made to create a major issue with Iran. I do not see how this instrument helps. The point I was trying to make is that other issues are at play here.

[Baroness Fairhead]

I do not deny that other issues are at play. For the purpose of this debate, the question is whether the blocking regulation supports our approach to the JCPOA, and I think it absolutely does.

[Lord Purvis of Tweed]

I thank the Minister for giving way. On the JCPOA, the core members of the EU, including the UK, have established a financial mechanism which will effectively protect British businesses conducting business with Iran. If we are moving to having a distinct system outside that mechanism, which is protected through the European process, if the SI is passed and we leave without a deal, where will British businesses be with regard to that mechanism set up through the aegis of the European Union? If British businesses cannot have the reassurance that they will have that European Union protection, they will feel vulnerable and be in a weaker position than they are now.

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[Baroness Fairhead]

Let me address that head-on. We are absolutely clear that we want certainty and protection for businesses. It is a difficult issue: support comes through banks, many of which choose not to engage given their dependence on their licence to operate in the US or for other commercial reasons. That is their choice to make.

Protection is not actually an EU event, it is an E3 activity—the UK, France and Germany. We have created a special purpose vehicle, the official name of which is INSTEX. It is designed to help businesses conclude legitimate trade. We believe that it has the potential to support the delivery of the sanctions relief that we committed to under the JCPOA and will facilitate trade under European and international law. It is part of the E3, and I think that that will be maintained. I acknowledge that it is not a perfect situation, but we are trying to make sure that we are clear that we are protecting businesses as much as we can in a difficult situation.

To conclude, I thank noble Lords who have participated for their constructive and challenging input to the debate. I hope that I have been able to provide further clarity and I commend the regulations.

Motion agreed.

Trade Bill

Baroness Fairhead Excerpts

3rd reading (Hansard): House of Lords
Wednesday 20th March 2019 Lords Chamber

Moved by

[Baroness Fairhead]

1: Clause 2, page 2, line 22, leave out “(4)” and insert “(4A)”

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, I am bringing forward amendments designed to maintain UK levels of statutory protection when implementing continuity trade agreements using the power in Clause 2 of the Trade Bill. The fact that I am able to do so is testament to the cross-party working that makes this House so valuable, and I have no doubt that this process has enhanced the legislation. I will speak to this amendment first and will respond to the amendments tabled by the noble Lord, Lord Stevenson of Balmacara, and my noble friend Lady McIntosh of Pickering once we have heard their contributions.

The Government are clear that we will maintain our domestic standards as the UK leaves the EU—an objective shared by so many of your Lordships. As we have stressed during its passage through this House, the fundamental aim of the Trade Bill is to achieve continuity in our trading relationships. A key aspect of that continuity is to ensure that UK statutory protections are maintained. These protections are highly valued by our businesses and consumers and are an important component of the UK’s offer to the world.

Noble Lords will recall the productive debate on this issue on Report on 6 March. We have since held constructive discussions with a number of noble Lords—including the noble Baronesses, Lady Jones of Moulsecoomb and Lady Henig, the noble Lords, Lord Stevenson and Lord Purvis of Tweed, and my noble friend Lady McIntosh—about how we can best reflect our shared objectives. I will now describe how we have achieved this.

This amendment restricts use of the power in Clause 2. It makes it clear that the power can be used only in a way that is consistent with the maintenance of UK levels of statutory protection in the listed areas. The term “UK levels of statutory protection” covers all UK domestic legislation relating to the protection of human, animal or plant life or health; animal welfare; environmental protection; and employment and labour. This includes retained EU legislation that is being brought into our domestic law as we leave the European Union. I will explain in a little more detail why we have fixed on the wording of these four categories.

First, we have chosen the formulation “protection of human, animal or plant life or health” because it is a broad description that includes, but is not limited to, the areas of food safety and public health. The purpose of this is to safeguard all legislative protections affecting human, animal or plant health. It may also be helpful to observe that this form of words is well understood in the WTO context, thus ensuring consistency with our wider international obligations.

Secondly, this amendment will ensure that environmental protection is secured. This is in line with the Government’s position on the environment, as reflected in the draft environment (principles and governance) Bill. Thirdly, it also ensures that the UK’s animal welfare legislation will be protected. Our animal welfare protections are held in high regard across the world, and we are clear that our trade policy should maintain them.

Lastly, we are making a statutory commitment in this amendment to uphold employment and labour protections. The Prime Minister is clear that we will not only protect existing workers’ rights but will, in time, seek to build on them. I again thank all noble Lords who have helped to shape this amendment. It achieves an important goal, which is both consistent with our trade policy and an improvement to the Bill.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I find myself in unfamiliar territory—I might even say unknown territory—here, because I am supporting a government amendment. I am grateful to the Minister for having tabled the amendment, which is a rewritten version of some amendments from Report and Committee. We now have in the Bill protection for environmental, employment and animal welfare standards. That is a real success. Obviously, it does not go as far as I would like, but I am not sure how many Members of your Lordships’ House would support me on all the things that I would like to see in legislation.

I would like to check the phrasing in new subsection (4A), which I find a bit convoluted. Was that intentional? I would appreciate the Minister explaining the reasoning behind it. In particular, is she completely satisfied that it replicates the full extent of the Government’s promises about protecting standards and leaving the environment in a better state than we found it?

Those questions aside, this amendment is a very important development, and I hope that it provides a framework that the Government will build on in their future legislation—for example, in the Agriculture Bill, the Fisheries Bill and the environment Bill. It has taken a lot to get to this point. The Commons considered the issue in its consideration of the Bill, and it has taken your Lordships’ House until Third Reading to come to any kind of resolution beyond warm words. I hope that the Minister will confirm today that we will not have to battle over this in future Bills, and that it will be government policy to write it into legislation from day one.

Many Greens and progressives have been highly critical of international trade and globalisation because it has, to date, represented a race to the bottom. The failure of TTIP, for example, shows the level of public feeling against shadowy trade deals that threaten our hard-won standards. Some of the proponents of Brexit, of course, have suggested that the biggest advantage of leaving the EU is that we can have a bonfire of “red tape” so that we can strike new trade deals. Many of us shudder in fear at that prospect.

This amendment stops that thinking in its tracks. This really is the baseline level of protection that we should have in our trade deals. Our negotiators should be going into trade talks with these very clear red lines that cannot be up for debate. Going forward, I will be working with noble Lords to enshrine the principle of non-regression in the environment Bill and other Bills, so that the only way is up for environmental standards. I realise that the environment Bill is outside the Minister’s brief, but I would appreciate it if she could encourage her ministerial colleagues to pre-empt all our amendments by writing this stuff into the Bill in the first place.

As the Minister has described repeatedly in this process, British standards are highly regarded across the world and are part of our British brand. I thank all the people who have written to me and supported my work on the Bill. Compassion in World Farming was particularly helpful, alongside the Trade Justice Movement, Greener UK and Liberty. The noble Lord, Lord Stevenson, has worked hard outside the Chamber to negotiate with the Minister to get us to this point—and it has been great fun to work with two passionate campaigners here in your Lordships’ House, the noble Baronesses, Lady Henig and Lady McIntosh of Pickering. Of course, I also repeat my thanks to the Minister and her officials for their generous time spent discussing these issues and bringing us to where we are today. This is the first step on a long journey, but I am happy to support the Government’s amendment today.

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[Lord Pannick (CB)]

My Lords, I would like to add to what the noble Lord has said on human rights. I thank him for bringing forward the amendment specifically to add human rights, but I am satisfied with his decision not to move it. The powers conferred on Ministers under Clause 2 would not, as I understand it, permit Ministers to act in breach of the Human Rights Act—primary legislation—in any event. I would be very grateful if the Minister could confirm that understanding. It would also be inappropriate to include human rights in the main amendment because many pieces of legislation do not expressly refer to human rights. This is because we have primary legislation, which has a particular force. Therefore, including human rights in the amendment to Clause 2 might possibly cast doubt in those other areas.

[Baroness Fairhead]

My Lords, I turn first to Amendment 3, tabled by the noble Lords, Lord Stevenson of Balmacara and Lord Purvis of Tweed, and the noble Baroness, Lady Jones of Moulsecoomb. I thank them for their contributions to the debate, and for the detailed and—as the noble Lord, Lord Stevenson, correctly said—robust discussions that we have had on this critically important matter.

Let us be clear that the protection of human rights is important; in fact, it is fundamental. That is why it has been given its own legislative framework through the Human Rights Act, as the noble Lord, Lord Pannick, stated. Not only that, but we have been consistent and are clear about our position on human rights as we leave the EU. Simply put, we will continue to uphold human rights and meet our obligations under the European Convention on Human Rights. The rights set out in the ECHR are already effectively and extensively protected in our domestic law by the Human Rights Act. The effect of Section 6 of the Human Rights Act is that regulations made under Clause 2 must be consistent with ECHR rights. Further, Ministers are required by Section 19 of the Human Rights Act to make a statement about a Bill’s compatibility with the European Convention on Human Rights, and this appears on the face of the Bill.

I am happy to confirm to the noble Lord, Lord Pannick, that there is no power under the Bill to modify the Human Rights Act, because there is no power to modify any primary legislation which is not retained EU law. That is made clear by Clause 2(5)(a) of the Bill. Regulations under Clause 2 must therefore be consistent with maintaining the UK levels of statutory protection provided by the Human Rights Act, and no amendment is necessary to provide that. This is why the Government consider it neither necessary nor appropriate to include human rights in the list of protections in our amendment to the Bill.

In fact—noble Lords have referred to this—we were worried that including human rights in the list could have unforeseen, unintended and, frankly, unwelcome consequences. It might, for example, suggest that the Clause 2 power could have modified our domestic human rights protections but for such an explicit reference. We are clear that that is not possible. It could also have implied that existing powers in other legislation, where there is no such express restriction, could be used in a way that is not consistent with our domestic human rights protections. Again, we are clear that they cannot. I thank the noble Lord, Lord Pannick, for his agreement on this; I know that his expertise carries enormous weight in these matters.

I turn now to Amendment 4, tabled by my noble friend Lady McIntosh of Pickering and the noble Baronesses, Lady Jones and Lady Henig. The Government agree with the spirit of this amendment: we must maintain UK statutory protections for food safety, including the protection granted by retained direct EU legislation. I am grateful to the noble Baroness, Lady Deech, for confirming in hard data the excellence of our standards. That is testament to the standards that we have in the UK. As I have previously said, and for the reasons I have given, we propose the broad formulation of,

“the protection of human, animal or plant life or health”.

I appreciate that this House will want to have confidence that this category includes food safety, and I am happy to provide that. The whole purpose of food safety regulation is to provide protection for human life and health. I am also happy to commit to publishing guidance that explains that this broad term should be read as encompassing all EU food safety and public health laws that will be retained in UK law, as well as being compatible with our international obligations.

The noble Baroness, Lady Jones, asked whether proposed subsection (4A) reflects the Government’s commitment to the environment. The UK is committed to upholding its high environmental standards around the world. As with other EU trade agreements, our aim is to replicate the effect of the existing agreements, restricting any changes to technical fixes deemed necessary. The UK continues to be a global leader on climate action, as demonstrated by our ratification of the Paris agreement last November, and as part of the UK’s Climate Change Act agreement of the UK’s fifth carbon budget in July 2016. The 2008 Climate Change Act commits the UK to reducing our greenhouse gas emissions by at least 80% by 2050 over the 1990 levels. We want to ensure that economic growth, development and environmental protection can go hand in hand. Wherever UK legislation protects the environment, this amendment requires that our Clause 2 regulations are consistent with maintaining that protection.

The noble Baroness, Lady Jones, also asked about the wording in proposed subsection (4A)—she asked about the protection of protections. I am advised by our lawyers that, in drafting legislation—and I believe this to be true—it is important to be legally precise, even where this means that a clause might sound slightly odd on a plain-English reading. Our amendment effectively sets up a two-stage test. First, do Clause 2 regulations make provision in any of the listed areas? Secondly, if so, is that provision consistent with maintaining UK levels of statutory protection in that area?

I turn to other questions asked by noble Lords. The noble Lord, Lord Purvis, asked about the impact of the government amendment in devolved areas. Proposed subsection (4C) makes clear that the protections given through this provision apply to the levels of protection that have effect in the UK or part of the UK which are in place when the regulations are laid. If higher levels of protection are in place in Scotland, Wales or Northern Ireland, these will be the levels that are maintained.

The noble Earl, Lord Lytton, asked how businesses and economic factors will be taken into account in the exercise of these provisions. This amendment is all about maintaining UK levels of protection in continuity trade agreements. We therefore think that this is outside that, because this is all about continuity.

[Lord Judd (Lab)]

My Lords, I declare an interest, as recorded in the register. I was very interested in the remarks of the noble Earl, Lord Lytton. The Government, of course, have constantly been committed: indeed, it has been on the face of relevant legislation. In any disputes about the national parks, scenic beauty and kindred issues take precedence. Will the Minister reassure us that what she is saying takes that point on board?

[Baroness Fairhead]

I am happy to make it clear that whatever exists now will continue to exist. This really is regarding continuity of the trade agreements that we are replicating as we leave the EU.

The noble Lord, Lord Krebs, asked some very specific questions that I will try to answer. The first was whether these applied only to the continuity trade deals, and the answer to that is yes. He asked whether it included all the provisions in transitioned trade agreements. The answer to that is yes: it includes all the provisions that we implement in our domestic law using the Clause 2 power. He asked whether the level of statutory protection includes published guidance, and the answer is that it includes all protections provided under primary legislation, subordinate legislation or retained direct EU legislation. Just to be clear, it includes all guidance that has statutory force.

I believe that the final question concerned the Food Standards Agency. It is our intention that it will continue to provide effective public reassurance. Again, the answer to that is correct. We might talk about the Food Standards Agency a little later on a following amendment.

I hope that I have addressed the questions, and I am very grateful for the constructive debate and the support the amendment has been given. Having addressed the two amendments, I ask the noble Lord and the noble Baroness not to press their amendments. I commend the amendment to the House.

Amendment 1 agreed.

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Moved by

[Baroness Fairhead]

2: Clause 2, page 2, line 43, at end insert—
“(4A) If regulations under subsection (1) include provision in any of the areas listed in subsection (4B), the provision must be consistent with maintaining UK levels of statutory protection in that area.(4B) The areas referred to in subsection (4A) are—(a) the protection of human, animal or plant life or health;(b) animal welfare;(c) environmental protection;(d) employment and labour.(4C) “UK levels of statutory protection” means levels of protection provided for by or under any—(a) primary legislation,(b) subordinate legislation, or(c) retained direct EU legislation,which has effect in the United Kingdom, or the part of the United Kingdom in which the regulations have effect, on the date on which a draft of the regulations is laid.”

--- Later in debate ---

Moved by

[Baroness Fairhead]

5: Clause 2, page 3, line 5, after first “for” insert “civil”

--- Later in debate ---

[Baroness Fairhead]

My Lords, this group covers Amendments 5 and 6. I will speak first to government Amendment 5. I will then respond to any additional points that the noble Lord, Lord Pannick, makes on his Amendment 6.

We had a valuable discussion in this House on Report on 6 March about what the powers in Clause 2 can and cannot be used for, prompted by the amendment proposed by the noble and learned Lord, Lord Judge, and the noble Lords, Lord Pannick and Lord Beith. That amendment was withdrawn, and I subsequently wrote to and met interested Lords to clarify the matter further and to consider how their concerns could be addressed without casting doubt on the meaning of other powers across our statute book.

Before addressing the detail of the Government’s amendment, it might assist the House if I confirm for the record that the Government entirely agree that it is not appropriate for Explanatory Notes to be used as a means to confine broad ministerial powers. Furthermore, the Government agree that the rule in Pepper v Hart cannot and should not be relied on to clarify unclear drafting. As I think one noble and learned Lord said in our meeting, Pepper v Hart is a judicial solution to legislative failings and should not be used to justify those failings. I am happy to have this opportunity to put on the record, for the avoidance of doubt, that the Government do not seek to rely on Pepper v Hart in the context of Clause 2. I was happy to confirm this in the letter that I wrote to the noble and learned Lord, Lord Judge, and other noble Lords who took part on Report. I have placed copies in the Libraries of both Houses.

[Lord Davies of Stamford (Lab)]

The noble Baroness said that the Government did not intend to rely on Pepper v Hart to deal with any issues that arise from the Trade Bill, which is very welcome indeed. Do the Government intend to use Pepper v Hart in other areas to clarify legislation in a way that they particularly want?

[Baroness Fairhead]

My Lords, I hope that the statement I made is entirely clear—we accept that Explanatory Notes should not be used to clarify legislation in that way.

[Lord Davies of Stamford]

I asked a question about Pepper v Hart, not about Explanatory Notes. They are two different issues.

[Baroness Fairhead]

I can confirm that the Government do not intend to use Pepper v Hart in the way that the noble Lord suggested we might. I hope that is clear to noble, and noble and learned, Lords.

I turn now to Amendment 5 and the considerations behind it. The power in Clause 2 cannot be exercised to create or extend criminal offences, impose fees, amend primary legislation—other than retained EU law—or create new public bodies. This is based on long-standing principles about the statutory construction of powers and on well-established legislative presumptions. These make it clear that certain things cannot be done by secondary legislation, unless they are expressly provided for in the enabling Act.

However, on the point about criminal offences, I am grateful for the very constructive discussions with noble Lords. These have led the Government to bring forward an amendment that would improve this Bill in a way that does not cast doubt on other powers in existing enactments. The Government’s amendment is simple but, we believe, effective. It inserts the word “civil” into Clause 2(5)(d) so the text means that this power to implement continuity trade agreements may be used only to make provisions for civil penalties for failing to comply with the regulations. The explicit reference to civil penalties, without mention of criminal offences, makes it clear that the power may not be used to make or extend criminal offences. I trust that these words, alongside the government amendment, will provide reassurance to your Lordships.

[Lord Judge (CB)]

My Lords, I first thank the Minister for her positive approach to the issues we raised in debate. In passing, I thank the noble Lord, Lord Stevenson, for helping us to sort ourselves out. The statement in the House today follows the exact terms of a letter that the Minister kindly wrote to me on 11 March. I welcome it. In the circumstances I just want to highlight why we brought this amendment before the House last time. It was to expose two constitutional heresies. The first was that Explanatory Notes may be used for the purposes of construing legislation. We thought that was a heresy. The Government had sent us a letter which told us that this was what they were going to be used for. The second heresy—which was in the same letter—was that Pepper v Hart could be relied on to clarify unclear drafting. The whole point of legislation is that it should be clear. Pepper v Hart is a last resort when this House or the other place has made a mess of the legislation.

I do not think it is necessary, or would be helpful to the House, to repeat what the Minister said. She said that she was referring to the letter. She lifted what she said to the House directly from the letter. With that, I think that for all times in the future—at any rate for the next considerable number of years—we can work on the basis that those two constitutional heresies shall be, and have been, consigned to the dustbin of constitutional oblivion. Can we please forget about it from now on?

I want to make a separate point to the Minister. I am afraid that events moved rather fast and I missed the boat on this. If I had thought about it sooner I would have had an amendment in to Clause 2(5) to exclude the words “among other things”. The fact that I missed the bus does not mean that I may not come on it if it comes into fresh or different legislation. If it is being thought of as a possibility for fresh or new legislation, I urge the Minister to make all her colleagues understand the way the Government approached the Healthcare—I cannot remember which of the many words followed that word—Act that we enacted last night omitted the words “for example”. Those words give far too wide a power to the Minister. I shall come back to “among other things” if the phrase ever returns, so forgive me. However, in view of the assurances from the Minister, the clarity of her observations to the House today and the amendment that would meet the concerns we advanced in relation to statutory construction, so far as I am concerned I do not propose to move my amendment.

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[Baroness Fairhead]

My Lords, I thank the noble Lord, Lord Pannick, for reflecting his experience in this debate and for the constructive and clear conversations that we have had. I am happy to confirm to the noble Lord, Lord Davies of Stamford, and to the House that I was making a general statement. I also confirm to my noble friend Lady Neville-Rolfe that I will listen to the words of the noble and learned Lord, Lord Judge, who said that the important issue here is for clear legislation not lazy legislation, and that this is used only as a last resort and should not be relied upon.

[Lord Pannick]

Perhaps I might ask the Minister to confirm that, contrary to some of the comments that have been made, she is not introducing some major constitutional change today but that the rule in Pepper v Hart remains; it is a rule of law. All that she is confirming, as I understand it—the noble and learned Lord, Lord Judge, will say if he disagrees—is that the existence of the Pepper v Hart rule that in the case of ambiguity the courts can look at what was said by the mover of an amendment or a particular provision does not justify ambiguous legislation. It does not justify loose drafting. I think that that is all that the Minister is confirming.

[Baroness Fairhead]

I am happy to confirm that that is exactly what I meant. I do not, I believe, have the power to overturn Pepper v Hart, nor am I minded to do so. However, I want to confirm as a general statement exactly what the noble Lord, Lord Pannick, has articulated. It has been of huge benefit to the House to address, as the noble and learned Lord, Lord Judge, mentioned, two heresies and I am grateful to my noble and learned friend Lord Mackay of Clashfern, who has supported us in getting to this stage. I also thank my noble friend Lord Wakeham for his words of welcome, and I have taken on board the comments of the noble Lord, Lord Lisvane. I am happy to take back, through the officials, the request of the noble and learned Lord, Lord Judge, to reflect to my colleagues continuing concern over phrases such as “among other things”.

The work on this amendment has been an illustration of the very best of the experience of this House. I hope that the detailed reassurances I have provided will allow the noble Lord, Lord Pannick, not to move his Amendment 6.

Amendment 5 agreed.

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[Lord Stevenson of Balmacara]

My Lords, I thank those who have supported me in bringing forward this amendment. Its history is that we debated it in Committee and again on Report, and have had a number of discussions on the issues it raised. The original concern was that in the other place an amendment was moved to the original Bill to insert the European Medicines Agency as a body with which the Government should seek to make arrangements in the event of a no-deal exit. The feeling was that that was rather too narrow in scope, and did not raise the wider issues about which other bodies might be appropriate for consideration. After discussion, we therefore came up with the proposal represented in Amendment 7. The second version of it on Report included a slightly longer list, but I have been persuaded that we should restrict the amendment to the list currently before your Lordships’ House. I would be grateful if it could be considered. I beg to move.

[Baroness Fairhead]

My Lords, the Government are grateful to the noble Lord, Lord Stevenson of Balmacara, who has worked tirelessly and constructively to find common ground between what he is aiming to achieve with this amendment and a position the Government can support.

As I said on Report on this issue on 13 March, the Government recognise that a deep and special relationship with the EU is likely to involve close co-operation with certain EU agencies and bodies. The Government also recognise that a close partnership with an EU body or agency may help to reduce non-tariff barriers to trade. That is why we will carefully consider how to develop such partnerships within the breadth of our future relationship with the EU.

There are six bodies listed in this amendment: the European Medicines Agency, the European Chemicals Agency, the European Aviation Safety Agency, the European Maritime Safety Agency and the two European networks of transmission system operators. The Government and the EU have already agreed, as expressed in the political declaration, to explore future co-operation with all of them.

The Government are working to find the best arrangement for the UK regarding other EU agencies and bodies. The decision to seek co-operation with an EU agency or body must be made only after careful consideration, bearing in mind the context of the UK’s overall aims for the future relationship and negotiations with the EU. The future of our relationship with EFSA, the European Food Safety Authority, and EUIPO, the European Union Intellectual Property Office, will be shaped by forthcoming UK-EU negotiations.

As we negotiate our future relationship with the EU, the Government are determined to agree ambitious provisions to help businesses protect their intellectual property rights. Indeed, in the political declaration, the UK and the EU commit to establishing,

“a mechanism for cooperation and exchange of information on intellectual property issues of mutual interest”.

In this regard, the UK would seek an appropriate level of co-operation with the EU and relevant agencies, such as the EUIPO.

The UK has a long tradition of close collaboration with EFSA, which we greatly value and hope to continue in the future. We recognise the important work of EFSA in providing scientific advice and guidance, and believe it would be mutually beneficial for the EU and UK to continue to co-operate in the sharing of knowledge and information. A close relationship between EFSA and the UK would support the joint ambitions of the EU and the UK for food and feed safety. However, it would be unwise to stipulate in UK law exactly how we want to co-operate with the EU in these areas, given the implications it could have for the wider balance of rights and obligations we are seeking for the future.

The amendment in the name of the noble Lord, Lord Stevenson, therefore reflects the position set out in the political declaration. His constructive approach to this issue exemplifies the positive tone of many of the debates and meetings we have had with a great number of your Lordships over the last few weeks. The Government are therefore content to support this amendment.

[Lord Stevenson of Balmacara]

I am grateful to the noble Baroness for her kind words and, more importantly, for accepting the amendment as drafted. I commend the amendment to the House.

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Moved by

[Baroness Fairhead]

That the Bill do now pass.

[Baroness Fairhead]

My Lords, I request the indulgence of the House to say a few words to express my sincere gratitude. I begin by thanking all those who have participated in our debates on this Bill. As has already been mentioned, this is the first Bill I have steered through your Lordships’ House. It has been a rewarding and constructive—although, I have to confess, at times challenging—experience. Your Lordships have spoken eloquently and with great knowledge about the changes you thought necessary to improve key provisions of this Bill—for example, the need for post-implementation assessment of continuity trade agreements, maintaining UK levels of protection when the power in Clause 2 is used, and clarifying the scope of the Clause 2 power in relation to civil penalties. The Government listened, agreed and responded, and I have no doubt whatever that this Bill is improved as a result. A further important change was the confirmation that the chair of the TRA would be subject to a pre-commencement hearing by the International Trade Committee.

I turn to individual contributions, starting with my noble friends Lord Bates and Lord Younger. They have been towers of strength, their support has been invaluable, and I am hugely in their debt. I also pay particular respect to the noble Lords who have set aside some of their valuable time over the past few weeks to meet me and my colleagues and discuss these important issues, so that together we could ensure that the Bill reflected the genuine intent of this House. I thank in particular the noble Lords, Lord Stevenson of Balmacara, Lord McNicol of West Kilbride and Lord Grantchester; and the noble Lords, Lord Purvis of Tweed and Lord Fox, and the noble Baroness, Lady Kramer. I also thank my noble friends Lady Neville-Rolfe, Lady McIntosh of Pickering and Lord Lansley, and my noble and learned friend Lord Mackay of Clashfern. I thank the noble and learned Lord, Lord Judge, the noble Lords, Lord Pannick, Lord Wilson of Dinton and Lord Beith, the noble Baronesses, Lady Jones of Moulsecoomb, Lady Henig, Lady Brown of Cambridge and Lady Deech, and the noble Earl, the Earl of Kinnoull, for their constructive approach. In particular, I single out the noble Lord, Lord Stevenson, for his tireless efforts and his contribution to achieving a better Bill. My noble friend Lady McIntosh has already referred to his charm and graciousness; I would add his effectiveness and his integrity.

This has been very much a team effort. Behind the scenes, the extraordinary Bill team have put in an unbelievable amount of effort. My thanks go to them, to my private office, and to all officials who have provided support. They have taken on an exceptional workload and have demonstrated huge expertise and commitment—but I have to give a special award to the Bill manager, Suzanne Greaves. She has been spectacular. Finally, I thank the doorkeepers, the clerks and all the staff, because their patience and professionalism has been unwavering.

To conclude, I have now seen at first hand the value that I have long known that this House adds to the legislative process. There may be aspects of the Bill as it leaves this place with which the Government do not agree, but I really believe that your Lordships can be justly proud, and we should all be proud, of the contribution made here to this important piece of legislation. I am immensely grateful to you all.

[Lord Stevenson of Balmacara]

My Lords, it usually falls to me to embarrass Ministers, not the other way round. I felt myself blush just then, and I hope it was not caught too closely on television—but I thank the Minister very much indeed for her comments.

Leading on a Bill in your Lordships’ House, whether in a government position or in opposition, is an honour and a privilege—but those who have done it before will know what I mean when I say that it can take over your life. It is not just the bad dreams and the nightmares of waking up and thinking, “Did I actually say that?” or “Did I forget that amendment?”; it is all the other work that goes with it: meetings with third parties who feel that they should participate in the Bill, and in our case—this may not be true of the Government—talking to our colleagues in the Commons, and to other groups in this House that have to be involved. It is well known that it is simply not possible to improve a Bill unless those of all parties, and none, join together to see what the public interest requires.

There are also meetings with the clerks, and Back-Bench liaison on our side, and voting strategy meetings. There is a lot going on, and that does not get any less as we come towards the end of the process. It gets to the point where you eat, sleep and dream the Bill. That is fine when it takes six weeks, but it is not fine if it takes six months, as this Bill has done, to get through to its final process.

There are pluses too. Working on a Bill means working intensively with colleagues. I do not just mean my noble friends Lord Grantchester and Lord McNicol, and our extraordinarily hard-working legislative assistant Ben Wood; it also means working with the Bill team. I agree that all credit is due to Suzanne Greaves and her team, because they have been fantastic to us as well as to Ministers, giving us information and responding, to a very high standard, to often ridiculous requests at very short notice. Ministers, including the noble Lord, Lord Bates, and the noble Viscount, Lord Younger, have been excellent at the Dispatch Box, both in what they have said but also in saying it very quickly. That is, I believe, often the hallmark of a good Minister.

I am sure I speak for the whole House when I congratulate the noble Baroness, Lady Fairhead, on what is, extraordinarily, her first Bill. She has it brought it to the House with consummate skill and considerable confidence. She ensured that we met regularly outside the Chamber for the meetings we have referred to, which were robust but extremely good and fruitful. We made progress and we were given all the information we needed.

We did not always agree—the Minister has acknowledged that—but where we differed, we did so only after all avenues for compromise had been explored and we proceeded on the basis of mutual respect for each other’s point of view. In doing that, we upheld the best standards of this House.

Trade Bill

Baroness Fairhead Excerpts

Report: 2nd sitting (Hansard): House of Lords
Wednesday 13th March 2019 Lords Chamber

These rollover deals represent trade with approximately 70 countries, which constitute around 13% of our exports and 12% of our imports. So far as we know—and that is telling—only four have been signed, nine are off track, 19 are significantly off track, four cannot be completed before Brexit and two are not being negotiated. The Government have refused to confirm how many separate and distinct agreements must be replicated to ensure continuity of trade on existing terms. This is a sensible amendment allowing Parliament to have oversight of the process, and I fail to see how that would or could undermine our negotiating position as we move forward. If the Minister is going to say that it would, will she explain in detail how? We are happy to support the amendment.

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, I thank the noble Lord, Lord Purvis of Tweed, for moving Amendment 23, and the noble Lord, Lord McNicol of West Kilbride, for building on it. The Government agree with the spirit of the amendment that providing updates on negotiations is necessary. It is fundamental to our approach that Parliament remains informed. It is something the Government have always sought to do and we will continue to do so.

Your Lordships will recall that, following concerns raised in Committee in this House, the Government published a paper on 28 February providing comprehensive proposals for the scrutiny of future free trade agreements. Many of your Lordships will also recall the debate last week on future trade agreements. The noble Lords, Lord Purvis of Tweed, Lord Stevenson of Balmacara and Lord Hannay of Chiswick, tabled amendments which facilitated a full debate on the scrutiny of future free trade agreements. In that debate, I again confirmed that, for future free trade agreements the Government will publish their outline approach to negotiations, including objectives, and that that would be accompanied by detailed economic analysis. The EU reports to which the noble Lord, Lord Purvis, referred are on future EU agreements.

We have committed to publishing progress reports after each negotiating round and annual trade reports across all live trade negotiations. In terms of Parliament’s role in this, I confirmed that in future free trade agreements the Government will work closely with a committee of both Houses or a committee in each House, and will provide information on a confidential basis to ensure that Parliament can scrutinise negotiations effectively from start to finish and throughout.

In relation to our trade continuity programme—the agreements that are the subject of this amendment—noble Lords will be aware that the Government published a Written Ministerial Statement on 21 February 2019. It provided an update to Parliament on the status of the continuity agreements. I hope it clarified a number of the points that the noble Lord, Lord McNicol, raised. I also trust that the noble Lord, Lord Purvis, will welcome the approach the Government are taking of informing Parliament each and every time a continuity agreement is signed. There have been seven free trade agreements so far and we will continue to take that approach.

These agreements have been accompanied by a signed or initialled report outlining the material changes between this agreement and the existing EU/third country agreement. These reports provide important transparency and inform not just Parliament but businesses and consumers. We will discuss three of the agreements and the reports later today. However, some of your Lordships may not be aware of what the Government have done above that over the past six months to keep Parliament informed more generally. For example, we have provided five oral evidence sessions to Select Committees by Ministers or senior officials, given 10 written updates to the International Trade Select Committee or the European Scrutiny Committee on trade agreement continuity, and answered seven Oral Questions and 53 Written Parliamentary Questions. I hope that those elements are further tangible proof of the Government’s commitment to keeping Parliament informed. However, while the Government agree with the intention of the amendment moved by the noble Lord, Lord Purvis, I am concerned that having this obligation in statute could have unintended consequences in making it more difficult to keep Parliament informed.

The noble Lord, Lord McNicol, asked what the issues were. They are the kinds of obligations that might arise while we are in the middle of negotiations with our partner countries. For example, if we were to say that an agreement discussion was progressing well and that all the key issues had been addressed, that might cause a negotiating issue on the other side. Equally, if we said we thought that it was performing poorly or that there were issues, that might expose issues that our partner countries were ill prepared to address. If negotiations were going badly, a public statement to that effect would likely prejudice them further, resulting, we believe, in a worse outcome for the UK. Our approach is to provide Parliament with as much information as we can, consistent with managing those risks. It genuinely is about getting the balance right between openness and transparency with Parliament and managing often delicate international negotiations.

I trust that the noble Lord, Lord Purvis, takes reassurance from this explanation and, most importantly, from our continued commitment to ensure that Parliament is kept up to date on the trade agreement continuity programme. I therefore respectfully ask the noble Lord to withdraw his amendment.

[Lord Purvis of Tweed]

I am grateful for the Minister’s response, and for the support of the noble Lord, Lord McNicol. He highlighted that we are likely to have seen only 13% of UK exports represented in the agreements that we have, so there is quite a long way to go. The issue then is whether a one-off published statement would be sufficient. However, I take on board what the Minister said about the other areas, on which there is ongoing engagement with Parliament; that is to be welcomed. I also welcome that in the Command Paper the Government have committed to publish material and to have an ongoing dialogue, both in public and in private, with committees that could well be established. I hope very much that the dialogue will also involve discussions about what type of information is appropriate to be released into the public domain and about doing so in a timely fashion.

On the basis of the Minister’s comments and on the understanding that, if we are to be secure in the information that I think we need on the continuity agreements, we will continue to be persistent on the Written Questions and on the opportunities in Parliament, I beg leave to withdraw the amendment.

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Moved by

[Baroness Fairhead]

26: After Clause 6, insert the following new Clause—
“Statement on equalities legislation
(1) This section applies where a Minister of the Crown proposes to make regulations under section 2(1).(2) Before a draft of the statutory instrument containing the regulations is laid before either House of Parliament, the Minister must make a statement—(a) as to whether the statutory instrument would, if made, modify any provision of equalities legislation, and(b) if it would, explaining what the effect of each such modification would be.(3) If the Minister fails to make a statement as required by subsection (2), the Minister must make a statement explaining why.(4) A statement under this section must be made in writing and published in such manner as the Minister making it considers appropriate.(5) In this section, “equalities legislation” means the Equality Act 2006, the Equality Act 2010 and any subordinate legislation made under either of those Acts.”

[Baroness Fairhead]

My Lords, we have talked at length about the purpose of the Government’s trade continuity programme, which is to seek continuity of the effects of existing EU free trade agreements as far as possible as we leave the EU. The vast majority of these existing trade agreements, which we are part of as an EU member state, are already in operation in the UK and have been scrutinised by Parliament.

Let me make it clear that, as part of this programme, we do not expect to need to change existing domestic equalities legislation. In the unlikely event that we need to make minor or consequential changes to this legislation, we will aim to ensure that this does not result in reduced protection against unlawful discrimination or diminution of equality rights. However, as indicated in Committee, to ensure suitable transparency and accountability on this important issue, the Government have worked closely with the Equality and Human Rights Commission to develop this amendment.

Amendment 26 specifically provides for a ministerial Statement to be made before any regulations are laid under the Clause 2 power to implement a continuity trade agreement. This statement will outline whether those regulations modify any provision of the Equality Acts 2006 and 2010 or any subordinate legislation made under those enactments. This is in addition to the reports that Parliament will receive under Clauses 3 and 5, setting out any significant differences between continuity agreements and the corresponding original EU agreements.

I trust that this House will accept this as further evidence that the Government have a strong desire to be transparent with Parliament, businesses and the general public about their continuity programme. I beg to move.

[Lord McNicol of West Kilbride]

My Lords, briefly, we on this side support the amendment and are pleased the Government are committed to protecting equalities legislation. However, I would like to see the Government go a little further and give a firmer promise that trade agreements will not allow any regression of standards as we move forward. I have nothing further to add.

[Baroness Fairhead]

My Lords, I thank the noble Lord, Lord McNicol of West Kilbride, for his support. As I think the House is aware, we are trying to work on standards to agree a mutually acceptable form of words.

I conclude by placing on the record my thanks for the positive engagement that the Government have had with the Equality and Human Rights Commission in relation to this amendment. We have worked closely together on developing it. As the House will have seen from the commission’s briefing, it too is supportive of the amendment. Consequently, I hope your Lordships will support the amendment. I beg to move.

Amendment 26 agreed.

Clause 7: Regulations: devolved authorities and general provision

Amendment 27

Moved by

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Moved by

[Baroness Fairhead]

29: Clause 8, page 6, line 12, leave out from “has” to end of line 13 and insert “the meaning given in section 20(1) of the European Union (Withdrawal) Act 2018;”

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[Lord Lansley (Con)]

My Lords, I will make three very quick points. First, we need to be clear that Amendment 31 simply tries to attach the words “special consideration” rather than “take account”. It is not that all the factors are not there; they are, and they will be considered. The point is that special consideration should be given to this. It is not necessary to do that, because the nature of the structure in Schedule 4 would suggest that that precisely would be the case. I cannot therefore support the amendment. Temperamentally, I want to support Amendment 32, but I fear that in practice there will be many such regulations and it would not be the best use of time for this House and the other place repeatedly to engage in approving regulations of this kind.

I am interested in whether the Minster has anything to add on the potential announcements today on tariffs, which we foreshadowed last week. It is said that all the existing remedies presently imposed by the European Union would be continued, even under a no-deal scenario, by the United Kingdom. I want to inquire—the Minister might choose to reply by letter—to what extent it will be sustainable for us to do that when the remedies will have been assessed in relation to the European Union as a whole, rather than to the United Kingdom itself. For example, an increase in imports leading to injury to an industry might well be applied by the European Union in relation to an industry in Italy or Spain, but it would not be appropriate for such a remedy to be applied in the United Kingdom. That would very rapidly be open to challenge if we do not get the Trade Remedies Investigation Directorate, which is up and running in the Department for International Trade, on the case, so that we can, if we have to—I hope we do not—apply remedies on the basis of an investigation with UK, rather than EU, data.

[Baroness Fairhead]

My Lords, I thank the noble Baroness, Lady Brown of Cambridge, and the noble Earl, Lord Kinnoull, for tabling their amendments and clarifying in advance their concerns with me and the ministerial team.

Before I respond fully to the amendments, I will take the opportunity to draw your Lordships’ attention to the steps that the Government have taken to ensure that the UK is ready to deliver a fully operational trade remedies system by exit day. The Government have brought forward legislation under the Taxation (Cross-border Trade) Act 2018 to establish the UK’s trade remedies system in the event that we leave the EU without a withdrawal agreement. These regulations also temporarily confer trade remedy functions on the Secretary of State until the Trade Remedies Authority, the TRA, is legally established.

Staff already recruited to DIT with the intention of transferring to the TRA on Royal Assent of the Bill, including those trained as investigators—the key function of this body—will carry out their functions as the Trade Remedies Investigations Directorate within the department. The directorate started work on 6 March and will deliver trade remedies functions in house pending legal establishment of the TRA.

Let me repeat that this arrangement will only be temporary. As noble Lords will appreciate, this is a necessary and pragmatic operational contingency to ensure continuity of protection for UK businesses. This must remain the Government’s priority. It is right that we plan for all eventualities, including where, for whatever reason, the TRA is not legally established under the Bill by 29 March.

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[Baroness Fairhead]

I thank the noble Lords, Lord Stevenson of Balmacara and Lord Kerr of Kinlochard. I am particularly delighted to be at the Dispatch Box to answer the inaugural commencement amendment from the noble Lord, Lord Stevenson.

We have had extensive debates on the Trade Bill, during which I believe all sides have acknowledged the importance of its provisions. I do not believe that this House disagrees with the underlying principles of the Bill. As my noble friend Lord Lansley pointed out, it is not just for a no-deal situation; it is to cover whatever the outcome of the negotiations with the EU might be. I hope and trust that your Lordships will acknowledge the need for any responsible Government to bring forward these provisions.

The Trade Bill covers four important areas for consumers and businesses. This House has debated them and is well rehearsed in them, and I do not propose to repeat the key ones in detail here today. The fundamental point which I hope your Lordships will consider carefully is that, if we do not enact this Bill in a timely fashion, that will have a direct and adverse impact not just on consumers but on businesses.

I am very aware that there are activities elsewhere at this hour that might have a bearing on this debate, but I remind noble Lords of the comment of my noble friend Lord Lansley that, if passed, this amendment could have very serious consequences for the UK. If a vote is passed in the other place ruling out no deal but no Motion is approved in favour of a withdrawal agreement, the default position at law is that the UK will leave the EU at 11 pm on 29 March. As a number of your Lordships have said, it would be an accidental no deal; it is not what the Government want, which is to have a deal. However, if that happens, the effect of the amendment would be to prevent the commencement of the substantive provisions of this Bill, and I do not believe that that is the intention of the noble Lords who are proposing it. Nevertheless, that is what would happen. The UK would leave the EU without a deal and without any of the protections offered by the Bill. I do not believe that anyone wants to see that.

The noble Lord, Lord Kerr, commented that the amendment would rule out an accidental no deal. We do not believe that it would; it would merely have the unintended consequence that, if there were to be an accidental no deal, the provisions would be prevented from coming into force. If the other place voted tonight in favour of no deal, the requirements in paragraph (b) proposed in the amendment would have been met. This would mean that the precondition for commencement would be satisfied, so the amendment would be rendered redundant by events.

Furthermore, as far as I am aware, no business groups or other representative organisations have indicated support for the amendment. In fact, many support the need to enact these provisions. For example, the CBI has stated that it remains,

“strongly supportive of the initiative to set up a Trade Remedies Authority”.

Similarly, the British Ceramic Confederation has stated:

“It is clear that we need a TRA, and it is certainly welcome that the Bill establishes one”.


We have heard cross-party support for continuity in both Houses of Parliament, and the International Trade Select Committee also confirmed that it struggled to find a witness who would speak against it.

I acknowledge, and understand, that passions and views are strongly held about whether this country should remain a member of the EU or leave. However, this should not distract from the core role of Parliament and of your Lordships’ House to ensure the best for this country’s people and businesses. No matter how strongly your Lordships feel about these issues, ultimately it must be a matter for the elected representatives in the other place to make a decision about the steps this country takes at this important moment in our nation’s history. This should not distract us from this Bill’s content, the importance of these provisions and the desire of consumers and businesses to see these vital provisions enacted.

During scrutiny of this Bill, the House has shown itself at its best, holding the Government to account and working with the Government to improve the legislation. However, for the reasons I have stated, we do not feel that there is a call for this amendment. I would therefore hope that the noble Lord, Lord Stevenson, feels able to withdraw instead of pressing to a vote.

[Lord Stevenson of Balmacara]

I am grateful to the Minister for responding as she has done. I pay tribute to her and her team for the considerable work they have done in trying to make sure that we get through this Bill and try to iron out the differences between us.

I think we will disagree on this. I have received information that the other place has voted 312 to 308 against a no-deal exit. We at least have that information in our hand as we think further about how this amendment might play out.

In response to the noble Lord, Lord Lansley, for whom I have a great respect and whose knowledge and experience have been very useful to the Committee and have informed our debates throughout the process of this Bill, we have already joined the GPA. That has gone through. The regulation-making power in the Bill is to make regulations about future changes in the GPA, not about the GPA itself. I disagree with him that we need this at this time. It may be necessary in future, but there may be other opportunities.

As has already been said, most of the establishing framework for the TRA is in another Bill already in place. As the Minister said, the Government have already introduced the regulations that give effect to the powers necessary for that to operate effectively. They are already through the House. The actual power in this Bill is not necessary. Many of its powers are not. They were appropriate earlier but not so now. I do not think we are talking about the substance of this. In some senses, this is a bit of a wake-up call to the Government, as well as a broader message to the wider community. On that basis, I would like to test the opinion of the House.

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Moved by

[Baroness Fairhead]

36: Schedule 1, page 11, line 28, leave out sub-paragraph (7)

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Moved by

[Baroness Fairhead]

45: Schedule 2, page 15, line 18, after “Crown” insert “acting alone”

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[Baroness Fairhead]

My Lords, I thank noble Lords for their continued engagement with the work to establish the Trade Remedies Authority. I trust that I am able to provide reassurance that we are taking proper steps to set up this important body in the right way.

I turn first to Amendment 59, tabled by my noble friend Lord Lansley and the noble Lord, Lord Stevenson of Balmacara. We listened carefully to the points made by them and other noble Lords in Committee about how best to ensure that the senior leadership is as independent as possible. This includes the appropriate role for the International Trade Committee. That is why I am pleased to announce that the Secretary of State is content for the International Trade Committee to conduct a pre-commencement hearing of the TRA chair. This hearing will take place after the Secretary of State has appointed the TRA chair, but before the chair has taken up their position. I further reassure the House that this offer of a pre-commencement hearing by the International Trade Committee will apply to all future TRA chairs, not just the first one. We hope that this will ensure that the ITC has the appropriate role in scrutinising any individual appointed to that position.

I turn now to Amendment 60, for which I thank the noble Baroness, Lady Brown of Cambridge, and the noble Earl, Lord Kinnoull. There are three key issues at hand that I would like to address. The first point is independence. Having had discussions with the noble Baroness and the noble Earl, I will say that independence really matters. We are committed to creating an independent TRA that all our stakeholders can trust and that will be seen as an independent body by third countries. We have taken clear steps to achieve this, including establishing it as a non-departmental public body in the first place, which is different from other organisations around the world, and giving it the appropriate separation from Ministers. We are ensuring that it has an independent board. That is why the Secretary of State will be required to follow the tried and tested Cabinet Office Governance Code on Public Appointments when appointing all non-executive TRA board members.

As this House will be aware, that code enshrines the independence of those members by explicitly stating:

“All public appointments should be governed by the principle of appointment on merit”.


TRA board members must be appointed based on their ability, not the stakeholder group or interest that they represent. The Commissioner for Public Appointments will regulate all non-executive appointments to the TRA, providing independent assurance that the Secretary of State follows the code’s strict rules on making such appointments based on merit and the public interest. While TRA non-executives may well have had experience representing certain stakeholders, we believe that that alone cannot be the reason why they are appointed. To do otherwise would jeopardise the true independence of the board, particularly as this is an investigative body.

The noble Baroness, Lady Brown, referred to the Higher Education and Research Act 2017. We do not feel that it is appropriate to draw parallels between the TRA and the Office for Students. The primary function of the Office for Students is to protect the interests of students, whereas the TRA has been set up to protect UK industry from unfair trading practices, which it will do by undertaking independent and impartial technical investigations into whether these practices have occurred. While this will ensure that manufacturers are protected against unfair trading practices, the TRA has not been set up specifically to protect the interests of those manufacturers or other groups.

The second point relates to skills and experience. I assure your Lordships that we are committed to making sure that the members are best placed to oversee this new function. That is why, when appointing the non-executive members of the TRA, the Secretary of State will have regard to ensuring that the board has the right balance of skills and range of experience. I will do more than pause, as requested by my noble friend Lady Neville-Rolfe. She has wide experience of sitting on boards in both the public and private world, and it is having that right balance and mix of skills and experiences that is most important. Moreover, this process does not happen behind closed doors. To ensure transparency, the requisite skills and experience for each non-executive appointment will be set out in individual TRA job descriptions that will be published in accordance with standard practice.

The noble Earl, Lord Kinnoull, raised a question about the TRA having regard to guidance, and we have included clear statutory restrictions on the Secretary of State’s ability to issue guidance to the TRA. That includes setting out specific circumstances in which the Secretary of State can publish guidance. For example, they cannot publish guidance in relation to a specific case. That is also why the Secretary of State must consult the TRA before publishing guidance, and explicitly have regard to its independence, impartiality and expertise.

These skills and experience requirements include, among others, strong and effective leadership, astute business awareness and an understanding of the complex domestic and international trading environment which the TRA will be operating in. However, we believe that specifying a detailed list of desired experience in statute risks restricting the Secretary of State’s ability to appoint individuals, and the chair and the board’s ability to appoint executives with other relevant experience not detailed here. It suggests that only those criteria listed in legislation are desirable, and may inadvertently displace others. That could create a problem if, in the future, a TRA non-executive was needed to fill a skills or experience gap not covered on the list.

On stakeholders, let me reassure the House that we understand the need to ensure that stakeholders’ interests are accounted for properly. We have also taken clear steps to ensure this. That is why the TRA chair’s job description, and terms and conditions, make clear that he or she will be expected to communicate with stakeholders and incorporate their perspectives into TRA board discussions where appropriate.

We specifically recognise the importance of the devolved Administrations in building the UK’s independent trade policy. That is why we have made several key commitments to ensure they, too, have an appropriate relationship with the TRA and DIT. These include sharing the TRA’s annual report with each devolved Administration, seeking suggestions for the optimal way to recruit TRA non-executives, and suggesting to the TRA chair that the board undergoes specific devolution-focused training. The Welsh Government of course have passed a supplementary legislative consent Motion in the Welsh Assembly, indicating their support for the TRA provisions in this Bill.

As we are reaching the end of Report, I will make some concluding remarks. This stage has provided us with a valuable opportunity to test and improve the detail of this important Bill. I thank your Lordships for that and look forward to Third Reading next week. Having said that, I respectfully ask the noble Lord to withdraw his amendment.

[Lord Lansley]

My Lords, I am most grateful to the Minister for her response to this short debate. It is fitting that we have further evidence in her response of the constructive and positive way in which Ministers have listened to the debate and sought to meet the concerns raised. That has been evident throughout our discussions.

I apologise—I should have declared an interest. I am the UK co-chair of the UK-Japan 21st Century Group, and in that context Sir David Wright, who is the chair-designate of the Trade Remedies Authority, was a member of that board and a former ambassador to Japan, so I know him. It will be evident from those who know him that the purpose of this discussion is not in any way to question his suitability for the post—far from it—but rather the process by which his successors are to be appointed in years to come. In that context I was grateful for the specific nature of the assurance my noble friend was able to give.

The difference between a pre-appointment hearing, in circumstances where the Secretary of State is minded to appoint somebody who is then seen by the Select Committee, and a pre-commencement hearing, where the Secretary of State has appointed somebody but the post has not been taken up, is a distinction without a difference in circumstances where the Secretary of State could proceed in any case. There is a benefit in such appointments being taken up by those seen by Parliament as well as by the Executive, not least having been seen positively in the context, not of trying to second-guess the Secretary of State’s choice of the right person but of understanding at the outset, before somebody takes up the post, how they propose to approach it, their suitability for the tasks, and what objectives they are looking for—what kind of outcomes they are hoping to achieve. In that respect, what my noble friend was able to say adequately and fully meets the purposes that I was raising in my amendment, so I beg leave to withdraw it.

Agreement Establishing an Economic Partnership Agreement between the Eastern and Southern Africa States and the United Kingdom of Great Britain and Northern Ireland

Baroness Fairhead Excerpts

Wednesday 13th March 2019 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I suppose this is in the nature of an experiment. This is the first time we have had an opportunity to go into detail about the new world that beckons, whichever side of the Brexit divide one is on. At some point in the future, whether sooner or later, the UK will certainly be faced with making a very large number of these treaties. We need to get used to wading through them and investigating in detail.

I had only a short time to go through the agreements on the Order Paper, but I was left reeling, not only from the pages that dealt with the individual tariff lines—I know I will have to do more work on these because of the Government’s announcement today. Even so, it was a pretty scary moment to try to realise exactly what was going on there, equally so to recognise the point made by the noble Baroness, Lady Neville-Rolfe, that a modern trade agreement is not just about widgets and physical objects but trade in services, attitudes, approaches, commitments to work together, future developments—all sorts of areas. It is a very complex area. I do not think one quite has a sense of how that works in practice until one reads the raw text.

The noble Lord, Lord Purvis, is right to ask us to dwell on how the process works. Obviously, the committee’s work is exemplary in this way. It may have been short of time and the necessary expertise, but it certainly managed to get access to quite a lot of information. It is full of information that would be very difficult to get if one did not have access to our expert support. It is very useful to give an initial sense of what we are really up against and to take the benefit of those who have gone before us. I do not think there is much more, other than to listen to the Minister’s response, which I am sure will be very fair and cover all the ground.

I want to flag up that I will be looking at these with one particular issue—investment—in mind. That should not be a surprise, since I have been raising this issue over all these trade agreements over a period of time. I looked through the agreements on the Order Paper today and could only find one reference to investment in Article 39 of the agreement establishing an economic partnership agreement between eastern and southern African states and the UK. Is this the only one with an investment chapter in it? Will the noble Baroness comment on whether that is a trend or just the way things are? I probably know the answer to that.

Given that this one has an investment chapter in it, what is the meaning behind paragraph 1(e) of Article 39? It says that the parties recognise the importance of investment and the objectives in this case are to,

“develop a legal framework that promotes investment by both Parties, with a view to promoting and protecting investment and work towards harmonised and simplified procedures and administrative practices”.

Does this mean motherhood and apple pie, or is it code for some new system of secret courts meeting in secret locations and taking decisions on investment with an adverse effect on the political and social economy of the countries concerned? I may have extended slightly to make my point, but I would be grateful for a response.

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, I thank all of your Lordships who have contributed to this debate for the many insightful points raised and the informed speeches made. I join my noble friend Lady Neville-Rolfe in commending the noble Lord, Lord Purvis of Tweed, for raising what is, as the noble Viscount, Lord Waverley, agreed, a very important subject. It is critical that we transition these three trade agreements, which cover countries accounting for £3.5 billion of our trade.

The noble Lord, Lord Purvis, has raised a concern with the scrutiny processes with respect to these continuity agreements. Let me reiterate what has already been done on scrutiny to date. For the sake of clarity, these are existing EU trade agreements that we are transitioning to bilateral agreements between the UK and third countries. Therefore, they have already been subject to a scrutiny process at EU level, and this was overseen in our Parliament by our EU Select Committees. Ratifying these agreements means that we can provide assurance to business in the UK and third countries that there will be trade continuity in any EU exit scenario.

However, we hear the noble Lord’s concerns that Parliament should have appropriate opportunities for scrutiny, and it is absolutely an objective of the Government that Parliament is afforded these opportunities. That is why the Government agreed to go over and above the requirements as laid out in the Constitutional Reform and Governance Act by setting out in a report to Parliament details of any significant trade-related differences between the UK and EU free trade agreements, and explanations for the changes. These reports must be published 10 days before implementing regulations are laid under the Trade Bill or before ratification, whichever is earlier. Indeed, I will shortly take the House through a precis of the three agreements and the reports that were laid alongside the texts. I hope this will demonstrate the detail that they include to those who have not had the opportunity to go through them, and will reassure the House about our approach to transparency.

I start with the UK-Chile agreement, which reproduces the effects of the EU-Chile agreement as closely as possible, making only technical changes to ensure that the agreement can continue to operate between the UK and Chile. It means that our businesses can, for example, continue to sell cars to Chile on existing terms. In fact, according to HMRC data estimates, 2,400 VAT-registered businesses in the UK exported to Chile in 2017 alone. Trade in goods and services between the UK and Chile was £1.8 billion in 2017—the top goods imported from Chile being edible fruit and nuts, beverages, spirits and vinegar, while our key exports to Chile were machinery and mechanical appliances.

In transitioning the agreement, the tariff-rate quotas in the UK-Chile agreement have been resized from the original EU-Chile ones to reflect that the UK is a smaller import and export market than the EU 28. These quotas were agreed following examination of a range of evidence including historical usage data and trade flow data.

I turn now to rules of origin. When the UK leaves the EU, the designation of UK exports will shift from EU-originating to UK-originating. To ensure maximum continuity for business, the UK-Chile agreement provides that EU materials can continue to be recognised in UK and Chilean exports to one another. Furthermore, EU processing can be recognised in UK exports to Chile.

The noble Lord, Lord Purvis, raised an important issue on where the new agreement differs from the original, and that is with regard to parliamentary committees. The original EU-Chile agreement established an association parliamentary committee as a forum for members of the European Parliament and the Chilean National Congress to meet and exchange views. The EU-Chile committee may, for example, make recommendations to the EU-Chile Association Council. Given the principle of continuity, it has been our intention to replicate the institutional structures of the original EU-Chile agreement where possible. With respect to the association parliamentary committee, we did not consider it appropriate to bind Parliament to this commitment without prior consultation. We have therefore agreed treaty text which reserves the right of UK parliamentarians to their position until such consultations have been concluded. The association council provides a mechanism that allows for the establishment of the association parliamentary committee at the request of the parties. If Parliament considers that it wants this committee to be set up, then DIT officials will work with Chilean counterparts to seek to establish this committee at the earliest possible opportunity.

Turning to the economic partnership agreement between eastern and southern Africa countries and the UK, this maintains the effects of the ESA-EU EPA in a bilateral context. As the noble Lord, Lord Purvis, reiterated, EPAs are asymmetric in favour of developing countries and are therefore critically important to their progress. The UK signed the agreement on 31 January with Mauritius, Seychelles and Zimbabwe, and we expect Madagascar and Comoros to sign in the near future.

Trade Bill

Baroness Fairhead Excerpts

Report: 1st sitting: House of Lords
Wednesday 6th March 2019 Lords Chamber

Moved by

[Baroness Fairhead]

That the Report be now received.

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, this House has debated many issues during the passage of the Trade Bill, none more important than the scrutiny of future free trade agreements. That was the subject of the Motion tabled by the noble Baroness, Lady Smith, seeking further details of the Government’s intentions in this respect. In response, last Thursday we published a Command Paper setting out further proposals for the parliamentary scrutiny of future FTAs. Those proposals drew heavily on the views put forward by Members of this House.

Noble Lords raised questions about Parliament’s role in future FTAs, the role of the devolved Administrations and legislatures, and public transparency. We listened, we considered carefully and we have acted. In particular, we hear concerns about transparency and scrutiny of negotiating objectives, transparency over negotiations themselves and the desire for Parliament to be involved at every stage of the negotiations and not just at the ratification stage. As a result, we have brought forward comprehensive proposals on public transparency and the role of Parliament and the devolved Administrations. I will not go into detail on those proposals now, as we will debate them fully during Report, but they give Parliament, and this House in particular, the reassurance that this Government are fully committed to effective parliamentary scrutiny and public transparency.

It is often said that no legislation passes the scrutiny of this House without being improved. From my perspective, this is unquestionably true here. Equally, it should be recognised that this House can and does influence and improve thinking beyond the strict confines of the Bills that pass through it. The Trade Bill focuses on continuity of existing trade agreements, but throughout its passage we have touched on issues of great importance outside of the scope of the legislative provisions before us and, as I said, none is more important than the scrutiny of future FTAs. It is perhaps not often that the Government welcome a Motion tabled by the Opposition on one of their Bills, but in this instance I can say that the Motion tabled by the noble Baroness, Lady Smith, served our common objective of ensuring that the scrutiny arrangements for future FTAs are robust, effective and informed by the passionate and expert Members of your Lordships’ House.

This Bill is essential to providing continuity and certainty for UK businesses as we leave the EU. I look forward to making progress on the Bill this afternoon and I beg to move.

--- Later in debate ---

[Lord Hannay of Chiswick (CB)]

My Lords, as one of those who supported the amendment of the noble Baroness, Lady Smith, I thank the Minister for her efforts in the meantime and for the publication of the Command Paper, which is a useful production and provides greater clarity on the Government’s intentions.

I shall make two small points. First, this legislation really matters. It could be—I hope it will not be—that within three weeks we will have left the European Union without a deal, in which case the Bill, by then perhaps an Act, will be the basis for Britain’s future independent trade policy. So we need to get it right. On the issue of parliamentary oversight, mandating and scrutiny, the Bill currently before your Lordships’ House on Report contains not one word added in that respect to the version we saw in Committee. The problem is the Government’s unwillingness to put in the Bill the provisions described in the Command Paper. That is at the heart of the debate we will have on Amendment 12.

[Baroness Fairhead]

My Lords, with the indulgence of the House I should like to welcome the start of Report. A number of points were made on the preceding Motion, but I believe that they will be picked up in our discussions on further amendments over the course of the day.

I have listened carefully to the thoughtful contributions that this House has made on the Bill so far—not just in our debates, but in meetings I have had with a great number of noble Lords over the past few weeks. I look forward to continuing to benefit from the experience, expertise and knowledge of your Lordships, and the continuation of the constructive dialogue we have had so far.

[Lord Kerr of Kinlochard (CB)]

I would like to ask one question of the Minister. I welcome the White Paper; it is full of commitments to transparency. What will be the tariff regime of the United Kingdom for imports on 30 March if we have left the European Union on 29 March with no deal? We know what the European Union’s tariff will be against us—it is the one we are currently applying—and we know that two months ago the European Union sent out instructions to the member states on how to apply the common external tariff against United Kingdom goods in the event of a no-deal Brexit. As far as I know, however, we know nothing apart from rumour about the regime that British importers will pay. Could the Minister enlighten us?

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[Baroness Fairhead]

As the noble Lord will be aware, the Government’s aim is to achieve a deal. As this House will also be aware, we seek to achieve some important agreements on or before 12 March. We are therefore not planning for no deal, which is not our preferred option. If and when that occurs, that would be the appropriate time to publish those schedules, but as I have said before on the Floor of this House our objective is to achieve an agreement, at which point we will move into the implementation period.

[Lord Kerr of Kinlochard]

I understand that that is the Government’s aim, but it is also the case that the Government have deliberately kept no deal on the table. British importers, businesses and farmers do not know what no deal means for them. Is that fair?

[Baroness Fairhead]

I understand the point that the noble Lord is making. As we have always said, we will seek to balance the protection of our consumers and downstream users from the possible price impact of no deal. The tariff regime will be subject to the approval of the House, and secondary legislation to give effect to the tariff will be laid in line with the Taxation (Cross-border Trade) Act 2018. The Government aim to secure a deal, so we hope that that announcement will not be required.

[Lord Lansley (Con)]

Before my noble friend sits down, I draw the attention of the House to Amendment 10, in my name and that of the noble Lord, Lord Stevenson, which relates to tariffs. It permits a debate of the kind that I think the noble Lord, Lord Kerr, was hinting that he wanted. It seems to me that we do not start on 29 March without a schedule. We have notified a schedule to the WTO, and it is in line with the EU’s external tariff. On that basis, we should talk about it later rather than now. We know where we start from. The issue is to what extent we might vary—that is, apply a rate of duty lower than the EU’s external tariff at some point after 29 March were we to leave without a deal.

[Baroness Fairhead]

I thank my noble friend for his clarification. That is indeed true but I think he will also accept that, if we were aiming to have a deal, we would not need to publish. If we got to a stage where no deal looked likely, clearly we would have to provide the information that he and the noble Lord, Lord Kerr, mentioned.

[Baroness McIntosh of Pickering (Con)]

My noble friend will be aware that the Secretary of State for Agriculture promised, at the NFU Conference more than two weeks ago, that the tariffs would be published. It would be immensely helpful for the House to have that information before us for the purposes of the Bill today. I wonder if there is a reason why the tariffs have not been published now.

[Baroness Fairhead]

I hope I have addressed that. Should no deal appear to be what is happening, they will be published. We are focusing very much on achieving a deal, so we do not feel that this is the right time to publish.

I thank all the noble Lords for their additional contributions. I look forward to debating these and other issues as we progress through Report.

Report received.

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Moved by

[Baroness Fairhead]

1: Clause 1, page 2, line 13, after “direct” insert “principal”

[Baroness Fairhead]

My Lords, as this amendment touches on the GPA, I inform the House that the UK has formally received an invitation to accede to the GPA. This was agreed by the GPA committee at a meeting in Geneva on 27 February, and I am sure that the House welcomes that news.

Government Amendments 1 and 2 have been tabled to clarify that the powers in the Trade Bill may be used to modify retained direct principal European Union legislation. These amendments are very simple in nature. They make it clear that the regulations made under either Clauses 1 or 2 may, like the powers conferred under the European Union (Withdrawal) Act, modify retained direct principal EU legislation. This will allow qualifications to be made which make retained direct principal EU legislation workable in the context of a UK outside the EU.

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[Baroness McIntosh of Pickering]

My Lords, perhaps there is a report from the Constitution Committee that would answer the question I am about to ask, but what is the concept of direct principal European legislation? I do not recall it being referred to—perhaps I should. Is it the main pieces of legislation? Could my noble friend be more specific?

[Baroness Fairhead]

My Lords, the concept of retained direct principal EU legislation is that of EU legislation that will come into UK law upon leaving the EU. This amendment will make a clarification to ensure that the same wording is used as in the withdrawal Act. Just for further clarification, because I asked it myself, saying “retained direct principal EU legislation” includes minor legislation.

Amendment 1 agreed.

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Moved by

[Baroness Fairhead]

2: Clause 2, page 2, line 41, after “direct” insert “principal”

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, we have had a very good debate on an important and long-lasting topic which we need to draw to some form of conclusion. We have before us two amendments that cover the ground very admirably, although their approaches are rather different. Indeed, the essence of what we are trying to get at may become a little masked in the timing. That last exchange is a good example of the way in which aspiration, interests and enthusiasm can sometimes lead us to a position where the drafting does not support where we are trying to go to.

We should be clear that there is support around the House for putting into the Bill at an appropriate place a clear and unambiguous statement which reiterates what the Government have said on a number of occasions—and we will probably hear again in a few minutes when the Minister responds—that they are committed to not lowering domestic standards in the EU agreements that are transitioning into bilateral agreements or in any future trade agreements that they wish us to enter into. If we can hold on to that and find the appropriate words rather than the ones before us, which need to be merged if we are to get the best out of this, we might make a way forward. I hope the Minister will give us hope that there will be the opportunity for further meetings and discussions on this issue. It is worth trying to go the extra mile to get us to a point where, by Third Reading, we have an agreed procedure.

The noble Lord, Lord Purvis, was right to try to drill down into some of the points that may need to be bottomed out. I will not repeat where there are difficulties but simply acknowledge that we need to be clear about whose standards we are talking about, where they are to be found in current statute, how they apply to UK interests and how they are limited in what they might say to any future Government about third-party Government arrangements, which are clearly not right.

Another point is to pick up how the WTO and other international agreements and treaties that we make covering the list in subsection (5B)(a) to (g) would fit best in a statutory form. That is the way that we need to go. I therefore hope that all parties will accept that this is not the time to force through either of these amendments but to come forward with an agreed position, if we can, in time for Third Reading.

[Baroness Fairhead]

My Lords, I appreciate the attention that this House has paid to the vitally important issue of standards at each of the Bill’s stages, and for the amendments tabled by the noble Baronesses, Lady Jones of Moulsecoomb, Lady Henig, Lady McIntosh of Pickering, Lady Brown of Cambridge, and by the noble Lords, Lord Stevenson of Balmacara and Lord Purvis of Tweed. I also thank their Lordships for the productive meetings that we have had on the subject.

The Government, like your Lordships, do not want and do not intend the strong environmental protection, food safety, and animal welfare standards that the UK is proud of to be lowered once we leave the EU. As I mentioned in Committee, the Prime Minister and Ministers from across government, including Defra and DIT, have made public commitments to the maintenance of the current protections and offered many assurances that we will not lower these rigorous levels of protection in order to secure trade deals.

Let us not forget that, first and foremost, our policy is one of continuity. We seek to carry over the effect of the existing EU agreements. Our trade continuity programme is rooted in our desire to deliver consistency to businesses and consumers as we leave the EU. This approach has been widely endorsed by partner countries, businesses and Parliament. The International Trade Select Committee report in March 2018, for example, stated:

“Almost no one who contributed to our inquiry suggested that the Government’s policy objective of seeking continuity was the wrong one”.


In relation to standards, I can confirm that, under the provisions of the EU withdrawal Act, we will start at a point of maintaining the high standards that we have benefited from as an EU member. This provides us with a strong basis to build on in future. This includes those provisions that the House will be aware of on chlorinated chicken or hormone-treated beef, which will not be able to enter the UK market. The UK has already transposed the relevant EU Council directive into UK law prohibiting the use of artificial growth hormones in both domestic production and imported products. This is now UK law. No products, other than potable water, are approved in the EU to decontaminate poultry carcasses, and this will still be the case in the UK when we leave the EU. EU food safety provisions will come across through the European Union (Withdrawal) Act 2018, where they will be enshrined in UK law.

The noble Baroness, Lady Jones, raised an issue about the unlimited duration of this clause. I would just like to clarify that there is a sunset clause for this power: unless it is extended by both Houses of Parliament, it will expire three years after exit day. That is set out in Clause 2(7).

I turn to the issue of reducing standards in future trade agreements. Our future trade agreements provide us with the greatest opportunities for the UK to develop its global trading position. The demand for UK goods, as I have seen first-hand, is based heavily on our outstanding reputation for quality and the British mark of excellence. The Government have no intention of harming this reputation. Indeed, we intend, as a minimum, to maintain the standards that we currently have, which are set out in our primary and subordinate legislation, and the high standards that we have led on maintaining as a member of the EU. We will continue to retain these as part of the retention of EU legislation, as we exit the EU, through the EU withdrawal Act. The desire to maintain the high levels of standards that we enjoy in the UK is therefore at the heart of the Government of this country and, more than not planning to reduce those standards, we have a strong policy of ensuring that those standards are maintained.

The noble Lord, Lord Purvis, raised a point about the WTO schedules and the fact that we are already suggesting that we might change them. I want to clarify that our WTO schedules will not change. These set out the maximum tariffs that the UK would impose. The UK, like any country, remains free to impose lower tariffs than those set down if it so chooses.

On Amendment 3, I thank the noble Lords for their amendment and for my conversations with them on this important issue. I fully understand the sentiment with which the amendment is laid and have already reiterated in my response the Government’s strong commitment to maintaining standards as we leave the EU. However, we feel that the amendment as currently drafted is problematic for a number of reasons.

First, the amendment comes with some uncertainties as to its scope. The term “standards” does not have a single legal definition which can easily be called upon. Any legislative commitment not to lower standards would need to make crystal clear what regulations are in scope. This amendment does not, and instead requires the Government to report against an open-ended list of potentially relevant standards, as my noble and learned friend Lord Garnier highlighted. This would require the establishment of a process to determine what constitutes “standards”, not only in each of the listed groups of standards but beyond. Outcomes of this process could then be easily questioned in a court and, until a court ruled on the matter, they would simply be the Government’s own assessment rather than legal certainties.

Secondly, on the notion of “reducing” standards, how the Government would prove that they were or were not reducing them would be problematic. This contains a degree of subjectivity, which would create considerable legal uncertainty if it were to be added to the Bill. Again, the term “standards” can mean a voluntary, best-practice way of doing something. Standards are often not set by Governments but developed by consensus among relevant stakeholders. Of course, there are minimum levels of safety, quality and environmental protection—for example, where voluntary approaches are not effective. These rules and regulations are mandatory and enshrined in our laws, which, of course, are subject to parliamentary approval.

We sincerely believe that the best way to influence standards in other countries is to forge strong trading relationships where we can positively influence those countries through the reputation of UK businesses. Through such relationships, we can insist on the proper treatment of workers and their rights, so that UK consumers are assured that the products they buy from reputable UK businesses are from suppliers whose practices those businesses have assured. In order to achieve that, we need to have trade agreements in place.

On human rights, which are referred to in paragraph (g) of the amendment, noble Lords will recall that the Government have already reaffirmed that the UK is a signatory to the ECHR and will continue to uphold human rights in the UK under the Human Rights Act. The Clause 2 power cannot be used to amend the Human Rights Act, and it would be unlawful for any regulation under the Trade Bill to be incompatible with the rights enshrined in the ECHR.

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[Baroness McIntosh of Pickering]

I have been looking at the continuity agreement reached with the Faroe Islands. I understand that it could potentially result in an implied annual increase in total duties of up to £11 million. It goes on to say that that is unlikely to be true, but I wonder: will there be scope to discuss these continuity agreements—as the noble Lord, Lord Purvis suggested? Perhaps we could do so in an afternoon session and take them all together. This agreement raises issues which will be of interest to the House.

[Baroness Fairhead]

My Lords, as I tried to explain, the Motions laid by the noble Lord, Lord Purvis, will be dealt with in the usual way. We look forward to those further discussions taking place.

[Lord Purvis of Tweed]

I may be able to help the noble Baroness. I am grateful for the response from the Government Whips’ Office and its suggestion of tabling time for these to be debated. I will not pre-empt these exciting debates on Faroe Islands fisheries, but they look likely to happen next week.

--- Later in debate ---

[Lord Mackay of Clashfern (Con)]

My Lords, I suppose I ought to take some part in this discussion. I hope to do so briefly, because I was a strong dissenter, on my own, against the decision in Pepper v Hart. I did not believe it was right to allow extraneous matters to be taken into account in construing an Act of Parliament. That Parliament had used the words, and that some Minister had said something in explanation, should not, to my mind, be used to deal with ambiguity. However, I was overruled then, and I am waiting for that judgment to be overruled in due course. Certainly, that judgment does not include statements not made in Parliament by people who are trying to say what they want to happen in the Act of Parliament, and the Explanatory Notes in no sense come within the judgment in Pepper v Hart. I have no doubt at all that the correct way to restrict a power to impose penalties is by putting the restriction into the Bill.

[Baroness Fairhead]

My Lords, I thank the noble and learned Lord, Lord Judge, and the noble Lords, Lord Pannick and Lord Beith, for tabling this amendment and for highlighting what is clearly an area of genuine concern—not just from them, but from the Constitution Committee.

I start by reassuring the House that the Clause 2 power will be used only to implement non-tariff obligations of our continuity trade agreements. For example, we will have to implement procurement obligations in several of our agreements, including the Chile agreement we signed recently. Without the Clause 2 power, we would not be able fully to implement such obligations under these agreements.

I stand before this House not professing to match in any way the legal brains and experience of noble Lords—and, indeed, noble and learned Lords—but I will give the Government’s position. Explanatory Notes are always admissible aids in the construction of an Act. Exceptional circumstances, as in the Pepper and Hart case, are not required. Indeed, I am asked to refer to the House of Lords case R v Montilla and Others in 2004, in which it was said:

“It has become common practice for their Lordships to ask to be shown explanatory notes when issues are raised about the meaning of words used in an enactment”.

--- Later in debate ---

[Lord Pannick]

I am very grateful to the noble Baroness. Under the Pepper v Hart principle, what matters is not the Government’s intention but the Government’s understanding of the scope of the provision they are putting before the House. I am asking the noble Baroness to say on the record, in Hansard, that it is the Government’s understanding and intention that the Clause 2 power does not give them a power to create or extend criminal offences, impose fees, amend primary legislation other than retained EU law or create new public bodies. It is not about the intention, but about the Government’s understanding of what they are putting before the House.

[Baroness Fairhead]

I am happy to confirm that that is the case.

[Lord Garnier]

Can I press my noble friend a little further? Why does she not simply arrange for Amendment 3A to be included in the Bill?

[Baroness Fairhead]

My Lords, there is a genuine difference of legal opinion here. My proposal is that we reflect on this and have a meeting, if your Lordships are content to do that, because we have to work through this.

[Lord Cormack (Con)]

I apologise for interrupting at this stage, but is my noble friend prepared to say on the record that this matter can be referred to at Third Reading, if necessary?

[Baroness Fairhead]

I am unable to make that commitment.

[Lord Judge]

May I respectfully ask what, in that case, would be the purpose of the meeting with the Minister to which she referred?

[Baroness Fairhead]

My understanding is that we have a clear legal position which is strongly believed, and the meeting would be to see whether we can reach a mutual agreement.

[Lord Judge]

If we can reach a mutual agreement on it, it is at least possible that the Government may decide to amend their Bill.

[Baroness Fairhead]

There will be other opportunities; perhaps we could have a meeting before the second day on Report.

[Lord Judge]

Provided it is understood that the resolution of this issue will abide or at least wait for a meeting between those of us who wish to meet the Minister—I would certainly be one of them—and those whom the Minister wishes to meet, that is fine. But I cannot leave the House in the position that we will now leave this for ever, and if the Minister deigns to do us the kindness of giving us what we want, we will have it. We have to know exactly where the Government stand on this. I know the argument, but where do we stand procedurally in the House?

--- Later in debate ---

[Baroness Fairhead]

I have heard a very well-argued case—the first time I have heard the impact of that case. I can commit to writing a detailed letter on our position, having a meeting and bringing this back on the second day on Report, if that is what this House would prefer to do.

[Lord Pannick]

I suggest that this matter cannot be brought back on the second day, because this is an amendment to Clause 2, which we will have passed. Given that the noble Baroness, fairly and properly, has accepted that what she has heard today requires further discussion, and that the Government may wish to consider further this matter after they have met with noble and noble and learned Lords who are concerned about this, surely the way to proceed is for the Government to accept that it is appropriate for this matter to be raised again at Third Reading to see whether any progress can be made.

[Lord Stevenson of Balmacara]

My Lords, we are in a very similar situation to where we were in an earlier debate. Clearly there is an issue which needs to be resolved between the Minister and those who feel strongly about it. She is putting the mover of the amendment in a difficult position, because the only right thing to do at this stage is to test the opinion of the House, and I am sure that that is not where we need to go on this. We need to give the Minister time to reflect on the issues and to be convinced, if she has to be convinced, by further points made, and, if necessary, to come back at Third Reading. That is not an onerous consideration.

[Baroness Fairhead]

I thank the noble Lord, Lord Stevenson, and I agree with that position.

[Lord Judge]

My Lords, I am grateful to the noble Lord, Lord Stevenson. I think that calling for a Division at 5.24 pm when we have so many other things to deal with might not have been very popular, although I suspect we would have won. I also thank the noble Lord, Lord Wilson, for enlightening me as to where Explanatory Notes come from.

I thank everybody who has spoken in this debate. I will leave it at this: the Executive accept that these powers should not be given. There should be no difficulty whatever in putting them into legislation, rather than leaving them in an Explanatory Note. Although the noble Lord, Lord Pannick has sought—and graciously been given—an assurance of the Minister’s position, I do not think that is enough. For the time being, at any rate, I shall not press this amendment.

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[Baroness Henig]

I absolutely agree. That is precisely my concern: that there is an effective scrutiny process in place to replace what we will lose at European level. In later amendments, we shall discuss future arrangements, but my concern is that in the rollover of the existing deals, we have effective scrutiny so that everybody knows where we are in the negotiations.

Parliament and business leaders should not be seen as the enemy from whom important national secrets must be kept, which seems to have been the way things have been going. Our businesses, exporters and trade bodies need to plan. They need to work in tandem with the Government. Of course we accept the need for confidentiality in trade negotiations. We all understand that, but the level of secrecy we have experienced in the past 18 months has been totally counterproductive.

My amendment would put some basic scrutiny arrangements in place to cover the period for which these deals are being rolled over. It enables Parliament, businesses and the wider community to know what stage they have reached and when they may be completed. Reporting once a Session is hardly an onerous requirement on the Executive. After all, our current Session is now nearly two years old. That seems to me a basic requirement for effective parliamentary scrutiny.

I hope that the Minister will tell me that the amendment is unnecessary, as the Government will bring forward something similar at or before Third Reading, but meanwhile I beg to move.

[Baroness Fairhead]

My Lords, I thank the noble Baroness, Lady Henig, for tabling Amendment 5. It gives the House an opportunity to revisit the issue of how the Government will update Parliament on the status of negotiations on the continuity agreements. We enjoyed a useful discussion on this in Committee.

First, let me reiterate that Parliament plays a crucial role in scrutiny of free trade agreements, and we intend that to continue. It is right that Parliament should expect to be updated by the Government. That is why the Government have already informed Parliament on progress of our continuity agreements through a Written Ministerial Statement. As your Lordships will be aware, they have already gone through a process of scrutiny in becoming free trade agreements with the EU.

We have also laid our first free trade agreements for scrutiny in Parliament ahead of ratification, which we believe is the right level of scrutiny, along with their accompanying parliamentary reports and explanatory memoranda, in which we have committed to giving explicit information about any significant changes, should any occur, making clear where they are, and any economic impact, should there be any.

Unfortunately, we cannot give a running commentary on the progress towards signature of our other continuity agreements. We believe that doing so would create a handling risk with our partner countries. Some partner countries may not wish to share such information, and a commitment to do so might prejudice the prospect of a successful negotiation. We are trying to get the best possible outcome for the UK.

However, let me assure the noble Baroness that, as we are aiming for continuity, we do not expect there to be significant changes. I therefore argue that the detailed reporting required by the amendment would be unsuitable for the continuity programme. For the future free trade agreements programme, the Government have committed to publish updates on the conclusion of each substantive negotiating round and to publish an annual report on all future trade agreement negotiation programmes under way. In this way, we will ensure that Parliament is kept fully updated on progress as we pursue new FTAs with partner countries.

Although I understand the desire to know what progress we are making towards transitioning continuity agreements, I hope that the noble Baroness, Lady Henig, understands the Government’s position and therefore request that the amendment be withdrawn.

[Lord Berkeley (Lab)]

Before the Minister finishes, I do not think that she answered my noble friend’s question about comparing the Government’s policy on non-disclosure agreements and secrecy with what the European Union has done for many years. That applies not just to these trade agreements, but to most discussions with industry and everyone else to do with the whole Brexit process. People seem to be required to sign NDAs before they get any information at all. Is that now the Government’s policy—that no trade agreements or anything similar can be achieved unless the industry concerned signs NDAs? That seems a pretty draconian change.

[Baroness Fairhead]

My Lords, the engagement we have with civic society, businesses and trade unions will be critical as we develop our future trade agreements, and we will continue those discussions. We have already talked about creating a strategic trade advisory group, which will contain members from civic society, trade unions and business organisations. We have also agreed to have expert bodies, so I hope that will reassure the noble Lord that we are intent on continuing very active engagement.

The difference here is that these are continuity agreements that have already been negotiated and scrutinised through a process, and we are aiming for continuity here. Therefore, we believe that the appropriate level of scrutiny by Parliament is for the Government to bring forward the reports when they have been signed, alongside a detailed report on the changes, if any, and the economic impact. Of course, ratification will be required, and that will go through scrutiny in the normal way.

There is a very different position on future free trade agreements, on which I wholeheartedly take on board the points made by the noble Lord and the noble Baroness.

[Baroness Henig]

I have listened carefully to what the Minister said. She talked about a “running commentary”, and I do not think that is what my amendment sought. It sought a report once every Session, which, I respectfully suggest, is not quite the same thing. As has been said, these are continuity agreements. What I—and, I am sure, many other Members of this House—seek is continuity: when we are no longer members of the EU, we want the same level of information as we were getting from the EU. We seek a level of information; we do not want a dilution of processes, with more meagre information and more difficulty in finding out what is going on. That is what lies at the heart of this.

I have listened carefully to the Minister, and I do not propose to pursue the matter at this stage—but I am sure that I and many other Members of this House will keep the Government’s feet to the fire on the issue of getting hold of information and making sure that everybody, particularly businesses, commercial organisations and people throughout the country, know where we are and what is going on. They should not have to rely on leaks from newspapers for their information. Having got that off my chest, I beg leave to withdraw the amendment.

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Moved by

[Baroness Fairhead]

6: After Clause 5, insert the following new Clause—
“Post-ratification report
(1) This section applies where—(a) the United Kingdom has ratified a free trade agreement, and(b) the other party (or each other party) and the European Union were signatories to a free trade agreement immediately before exit day.(2) Before the end of the period of five years beginning with the date of ratification, a Minister of the Crown must publish a report giving the Minister’s assessment of the impact of the agreement on trade between the United Kingdom and the other party (or each other party) to the agreement.”

[Baroness Fairhead]

My Lords, this group includes Amendments 6 and 7. With the indulgence of the House, I shall speak now to Amendment 6, and then respond to Amendment 7 when my noble friend Lady Neville-Rolfe, who tabled it, has spoken.

I thank noble Lords for their contributions during the discussion on post-ratification reports during the Committee stage. Once again, the debate demonstrated the value of this House and your Lordships’ expertise and knowledge. In the light of that debate, I can confirm that the Government accept that post-ratification reports are important tools for understanding the real effect trade agreements have on the economy. They are useful not only in informing our discussions in joint committees but in refining our strategies for future trade negotiations.

Having had the benefit of this House’s wisdom in Committee, the Government have tabled an amendment that would require a Minister of the Crown to publish a report on the impact on trade of each of our continuity free trade agreements. These reports will need to be published within five years of ratification of the agreements. The reports will assess whether trade flows between the UK and the other signatory or signatories have changed since the agreement began to be applied. If there has been a change, the reports will then discuss how much of that change can be attributed to the agreement itself.

Given that these reports will consider impacts across the whole of the UK, this will include an assessment of any impacts on the devolved nations. We will of course share these reports with the devolved Administrations. I hope the House will support the amendment.

Amendment 7 (to Amendment 6)

Moved by

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[Lord Purvis of Tweed]

That is helpful. However, my question to the Government remains as to what the status of the Bill would be, under the amendment, with regard to the reporting mechanism. Japan is one example among the vast majority of examples also in this category. A degree of clarification on that would be helpful.

The second issue is: why five years? Under the regulations, the agreements have to be renewed by Parliament after three years. One could therefore have a situation whereby an agreement could be renewed twice, lasting nine years, but with only one report. Would it not be better if the Government brought forward their report prior to the conclusion of the three-year life of the agreements? It would be no more burdensome for there to be a reduction from five years to three, and the report would be one of the key documents that Parliament would use when considering whether or not to renew the regulations after the three years; otherwise, they would be significantly out of kilter and either the report would not be helpful to the extension of the regulations or we would be unable to have a meaningful discussion on their extension in the absence of a report on the impact on Britain of the agreement.

[Baroness Fairhead]

My Lords, I thank my noble friend Lady Neville-Rolfe for Amendment 7, which brings reporting on future FTAs into scope, and her support for Amendment 6. The engagement I have had with my noble friend, as with others in this House, has been invaluable.

My noble friend asked why we are not agreeing in statute to lay the reports before the devolved Administrations. The UK Government, as a point of constitutional principle, are not responsible for laying documents in the devolved Parliaments. However, I recognise the importance of ensuring that the devolved Administrations are appropriately involved. That is why we are proposing that the Minister will make a commitment in the House that the Government will send the reports to the relevant Ministers in each of the devolved Administrations. We hope that that solution addresses the objective and the constitutional agreement.

[Lord Purvis of Tweed]

From my experience of the Scottish Parliament, there is nothing to prevent any UK Government submitting to the Library of the Scottish Parliament or Welsh Assembly documents similar to those laid in the Library of this House, so that MSPs and AMs can be informed and do not have to rely on their Governments submitting them.

[Baroness Fairhead]

That is a helpful interruption, but we would probably like to have a more formal process for handing the reports to Ministers and devolved Administrations.

As my noble friend may be aware, the Government published a Command Paper on 28 February on our processes for making free trade agreements after the UK has left the EU. In that paper, we outline our plans for transparent scrutiny of future FTAs, including publishing a scoping assessment prior to launching negotiations. We will also publish full impact assessments of new FTAs once negotiations are concluded. It is important to note that we have not yet begun negotiations on new FTAs, but the Government would be willing to consider publishing similar reports for future FTAs to those required by the amendment or continuity free trade agreements.

As regards our helpful discussion on the agreement between Prime Ministers Abe and May, the UK undertook to make an enhanced agreement with Japan. My noble friend Lord Lansley was correct in saying that the Japanese Government have agreed that, subject to there being an agreement, the EU-Japan agreement will continue during the implementation period, as with all our other continuity agreements. The Command Paper on scrutiny and transparency sets out our overall approach to scrutiny and consultation in relation to trade agreements. The UK and Japan have agreed to deliver a bilateral trade agreement based on the EU-Japan EPA, enhanced in areas of mutual interest, as I said. In scenarios such as this, the exact approach that we take on scrutiny and consultation will obviously depend on the nature and potential impact of the agreement that we seek.

The noble Lord, Lord Purvis of Tweed, asked whether the reporting requirements referred to in the proposed new clause would apply to Japan. The answer is that they would. The reporting requirements apply to all agreements with third countries that sign an FTA with the EU before exit day.

I hope that with that assurance my noble friend Lady Neville-Rolfe will feel able to withdraw her amendment.

[Baroness Neville-Rolfe]

I thank my noble friend for her very helpful assurances and have pleasure in withdrawing my amendment.

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[Baroness Fairhead]

My Lords, I thank the noble Lords, Lord Stevenson of Balmacara, Lord Purvis of Tweed and Lord Hannay of Chiswick, for tabling Amendments 12 and 35. They seek to ensure that Parliament has a significant role in free trade agreements and impose obligations on the Government and a scrutiny committee in relation to mandate-setting, transparency and approval of free trade agreements.

I fully understand the desire of noble Lords right across the House to ensure that there is strong and effective scrutiny of future trade agreements. It is an objective that the Government share. We have listened carefully to the views put forward in both Houses on this topic and last week published comprehensive proposals for enhanced scrutiny of future trade agreements in a Command Paper. This included confirmation that we would publish our outline approach to negotiations, including our objectives, accompanied by detailed economic analysis.

We further committed to publishing progress reports after each negotiating round and an annual trade report across all live negotiations. This draws on best practice internationally and will ensure a high degree of public transparency around our negotiations. In terms of Parliament’s role, we committed that we would work closely with a committee, or one in each House, to ensure that it could effectively scrutinise negotiations from start to finish, as well as setting out opportunities for scrutiny of FTAs throughout negotiations.

It is to this role that Amendments 12 and 35 apply. I will address these amendments and our proposal in this area in more detail. Amendment 12 would disapply CRaG to trade agreements and instead require that the agreement secured the approval of both Houses prior to being ratified, as well as requiring the approval of both Houses for negotiating mandates. Without wishing to revisit ground that was covered during Committee, it is worth reiterating that such a proposal goes to fundamental constitutional principles that underline the negotiation of international treaties. The negotiation and making of treaties, including international trade agreements, is a function of the Executive. This rule is not only the result of centuries of constitutional practice but also serves an important function. It enables the UK to speak clearly, with a single voice, as a unitary actor under international law. It ensures that partners know our views and are able to have faith that our position, as presented formally in negotiations, is the position of the United Kingdom.

Regarding the setting of mandates, we have considered international practice, and it is telling that there was none among those we considered in which the legislature had this role. That includes the EU, Canada, Australia and New Zealand. The noble Lord, Lord Bilimoria, referred to the United States. It is true that the United States legislature is different from ours. Congress does not vote on a mandate for each agreement but delegates authority for brokering trade agreements through a trade promotion authority. This includes setting out overall objectives for trade negotiations and legislation but not specifically for individual deals. The trade promotion authority then enables an expedited process for the consideration of trade deals whereby Congress has 30 days to consider the mandate for an individual country negotiation and can call hearings on them with the United States representative. They are therefore consulted in relation to the specific mandate for each country and during negotiations, as we plan to consult Parliament.

The noble Lord, Lord Hannay, said that there had been no consultation with Parliament, but there was a debate on 21 February to consult the Commons on four new free trade agreements we are considering. As he will understand, we are unable to negotiate right now while we are members of the EU. We will ensure that Parliament has the opportunity to scrutinise the outline approach to negotiations, and those would usually go to general debate in each House.

[Lord Hannay of Chiswick]

I am most grateful to the Minister for that clarification. I think I heard her say that there will now be an opportunity to consider the objectives the Government are pursuing in their negotiations—when they are able to conduct them—with Australia, New Zealand and the United States. That is very helpful, but she seems to be making rather heavy weather about the word “mandate”. She gave us a very lengthy exposition of the royal prerogative, which is something that is behind us but is now exercised, of course, by the Government. Could she not possibly think a little more carefully about ways in which this objective could be achieved? She has said already, I think, that the Government intend to set out their objectives in the negotiation. Why can they not say that they would seek the view of both Houses of Parliament on their objectives, which would be a mandate for the negotiations? That is all that is being suggested.

[Baroness Fairhead]

My Lords, the chosen words of the Government are “outline approach”. On the noble Lord’s point, the ability to have objectives in that outline approach and the ability for both Houses to debate and scrutinise those objectives is the key part of what we are discussing here. I agree with my noble friends Lord Hailsham and Lord Lansley, who talked about the critical issue here, which is consideration and discussion. That is absolutely what this Command Paper proposes—in the initial stage of the outline approach, to particularly scrutinise those objectives.

[Lord Bilimoria]

The noble Lord, Lord Kerr, said very clearly that the power of having Parliament behind the Government enhances our negotiating position with the mandate that that gives. The exact example is: why have we been outgunned by the EU in the negotiations over the past two and two-thirds years? It is because it has had a clear mandate from 27 countries, whereas we have a divided country and a divided Parliament. That does not give a clear mandate whatsoever, which is all the more reason we need the amendment.

[Baroness Fairhead]

My Lords, I do not want to go into the world of semantics, but the preferred term is “outline approach”. The objectives will be the objectives set, which will be scrutinised in the way in which we are proposing in both Houses. I agree totally with the noble Lord, Lord Kerr, that you want the ability to go back and say, “I do not think that will get through my executive board” or whoever because we want a clear set of objectives. This is what we intend to have, and an ability to say, “I do not think that will rub”. I also note that the International Trade Committee in the other place did not call for the power to approve the mandate.

We recognise the legitimate desire of this House to ensure that Parliament is able to shape our approach to negotiations. That is why we are committed to publishing the approach to negotiations. It will include those objectives. We will ensure that Parliament can scrutinise these. My noble friend Lord Tugendhat asked whether it is sufficient. We are trying to ensure enhanced scrutiny, so that is exactly what the Command Paper proposes. As I said, we expect that this would usually be through a general debate in each House.

[Lord Warner (CB)]

Does the Minister not accept that a Command Paper does not give the assurance to Parliament that provision in legislation does?

[Baroness Fairhead]

My Lords, I will come to that point later, which relates to the question that the noble Lord, Lord Hannay of Chiswick, raised on whether these matters should be on the face of the Bill.

The essential point is this: this is the first time in 40 years that we have been negotiating a free trade agreement. We are keen to make sure that we do not lock ourselves into a process by having detailed elements on the face of the Bill which would then be difficult to change. What we want to do is to ensure that, through this Command Paper, the process of an enhanced scrutiny is clear, that there is an ability for Parliament to scrutinise at every stage and, furthermore, that there is a committee which will meet in confidence, which I think was something that was raised in this House as critically important. The noble Lord, Lord Hannay of Chiswick, raised this with reference to the ISC, pointing to the fact that sometimes confidential discussions need to be held in a room with a committee of experts. That is what we are proposing. We would also expect these outline approaches and objectives to be the subject of close dialogue with the relevant committee.

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[Lord Mackay of Clashfern]

While my noble friend is proposing to make a comment, it is highly important that the question of whether something should be discussed at Third Reading is a matter for this House. We have become rather accustomed to attempts on the part of Ministers to decline the opportunity of a Third Reading, but it is for this House to decide. I have no doubt that this particular, very important problem, which involves a delicate balance between the Executive on the one hand and Parliament’s two Houses on the other, should be handled with the utmost care. As the noble Lord, Lord Stevenson of Balmacara, noted, this is an issue about which there is already a bit of difficulty with the detail. We must try to get this right. I have no doubt that, if it is agreed at this stage, the House will allow it to be raised at Third Reading.

[Baroness Fairhead]

My Lords, we have had very fruitful discussions and come quite a long way on this point. All I can say is that I would be happy to discuss it further but I cannot guarantee to come back at Third Reading with any changes. On that basis, the noble Lord will have to decide how he chooses to treat his amendment.

[Lord Stevenson of Balmacara]

The Minister is certainly very brave to take on a former Lord Chancellor in his pomp. I agree with the noble and learned Lord. The House has a very strong view about this and would like to see it back, but I am stuck with the procedural arrangements, as far as I understand them. I cannot amend the amendment before the House at the moment. I assume that the only way to do this would be to vote it through—if the House will agree to its view being tested—and hope that we can bring it back either through ping-pong or in some other way. I give way to the noble and learned Lord to see if he has inspiration of his own.

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[Baroness Fairhead]

I thank the noble Lord, Lord Stevenson of Balmacara, for tabling this amendment. I will make some statements about why we are much more supportive of ISDSs and these dispute resolutions. I draw noble Lords’ attention to the fact that, as this House is aware, the Trade Bill is not intended to cover future free trade agreements or the investment policies associated with them. As a result, Clause 2 allows the Government to change domestic law where necessary to ensure that these continuity agreements can operate in a UK context. To be clear, no powers in the Trade Bill will be used to implement investment protection provisions, because such provisions in trade agreements do not require legislation.

I want to comment about investment protection provisions more generally because I believe they have a place. According to UNCTAD, foreign direct investment in 2017 was around $30.8 trillion. There are around 3,000 international investment agreements, most of which include these sorts of provisions. They have been going for over 40 years and, to date, only 855 claims have ever been completed. This means that, for the vast majority of investment agreements, no claims have been made. Furthermore, states have won more claims than investors—37% to 28%—with the rest either settled or discontinued. This does not suggest a bias in favour of investors and, I hope, offers a bit of comfort.

I understand the concerns that have been raised in the past, but our assertion is that many have been overstated. Often, ISDS mechanisms are attacked because they seem able to force a Government to regulate in a particular way in the public interest. However, they do not infringe on that right to regulate. The right of Governments to regulate is protected in international law. I reassure the noble Lord that the threat of potential claims has never affected the UK Government’s legislative programmes. We have more than 90 agreements with these clauses, as the noble Lord said. We have never had a successful claim made against us.

The amendment would require investment disputes to be heard by UK courts or tribunals in all instances, which has the potential to undermine what we think has been quite an effective process—an internationally accepted framework which has successfully supported our investors worldwide. The noble Lord, Lord Stevenson, mentioned new concepts, including the multilateral trading court. I agree with him that that is just one of a number of concepts. Work is at an early stage internationally. Future negotiations should take place in a forum where states will be fully involved to ensure that the system delivers. I fully agree with the noble Lord on that. We support the objectives of ensuring fair outcomes of claims, high ethical standards for arbitrators and increased transparency, which is another of the points that have been held against the previous systems. We have pushed hard for greater transparency.

As the noble Lord is aware, we in the UK expect other countries to treat our businesses operating abroad as we treat their investors in the UK. Our concern is that if the amendment were passed, it would be likely that any future partners would also insist on reciprocal provisions. That would mean that any disputes brought by UK investors against a host state would be required to be heard in its national court. This has the potential to be to the disadvantage of our investors.

The amendment could also create a precedent by encouraging some existing bilateral investment treaty partners to seek amendments with the UK to ensure consistency. UK investors—I am sure we all agree—can make incredible contributions to the countries in which they invest, including in hospitals, schools and other infrastructure. Potentially, this amendment could lead to decisions by UK investors to not invest. These countries would therefore not benefit; indeed, our assertion is that countries could be damaged in investment terms. I also ask noble Lords to note that, while international arbitration has been a valuable tool for our investors—who, in some cases, have been subject to egregious treatment by local Governments—we have never been successfully sued.

Most of our future negotiating partners who favour the inclusion of investment protection and ISDS would expect this to include some form of dispute resolution through a means that the international community is trying to work out. Securing agreement on an alternative domestic process could lead to the UK having to accept an unwelcome trade-off.

Additionally, as I highlighted at the start of my comments, the Trade Bill is not intended to deal with future free trade agreements. Therefore, we do not propose coming back with any changes on this at Third Reading. I am very happy to have discussions with the noble Lord outside the Chamber, but in respect of the true aims of this Bill and the systems already in place to resolve those disputes, I ask him to withdraw the amendment.

[Lord Stevenson of Balmacara]

I am very grateful to the Minister for her full response. I look forward to reading it in Hansard. I will take her up on her offer of further discussions, but at this stage, I think the best thing is to withdraw the amendment.

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[Lord Deben (Con)]

My Lords, I wish to make a confession: when I was a Minister responsible for this area, I disobeyed the Government’s policy. Then, it was that we should be opposed to all these appellations and very determined in insisting that they were a restraint on trade and a disgrace. I thought that was nonsense. We have done great damage to our food industry by not defending so many of the things we have. Cheddar cheese, for example, can be manufactured almost anywhere in the world, but it is a Great British invention. The noble Lord, Lord Tyler, referred to what Cornwall has produced; in Suffolk, we now have a kind of local food industry which is really important. The fact that the food is made locally matters hugely, even if it is sold a long distance away.

This is much closer to what people want; it is much closer to what food ought to be like. It is much further from the kind of industrialised agriculture and food industry which, we must understand, is the “museum”—if I may use the expression of the ambassador from the United States. It is a museum of the kind of food we have produced, which has not had this very important distinction. Part of that distinction is the geographical identification. I know that my noble friend will be hugely supportive of this, but I thought I ought not to leave the opportunity to admit my past transgressions.

[Baroness Fairhead]

My Lords, I thank the noble Lord, Lord Tyler, for tabling this amendment. I fear, however, that I may not be able to give it the wholehearted support that he wants, because it seeks to bind the UK into a negotiating position of agreeing reciprocal protection of all EU and UK geographical indications—GIs—as part of the future economic partnership agreement. I can, however, reassure this House, the noble Lord, Lord Tyler, and my confessional noble friend Lord Deben, that the Government fully recognise the importance of continuity in the protection of UK GIs. We have heard, loud and clear from all parts of the UK, the concerns of our producers. It remains a priority for us to secure this protection; we agree that it is very important to maintain it.

While we share the objective of continuing the protection of UK GIs, we do not support the amendment because its effect would be to restrict our negotiating position on the detail of the future agreement. It is important for the Government to retain options that give us the flexibility to conclude negotiations successfully, with both the EU and potential future partners, in line with UK interests. These negotiations will be to the great benefit of UK industry, not least the UK’s superb food and drink industry, by opening markets to our products.

As I hope I explained in the House on the last occasion, the protection of UK GIs in the EU has been confirmed as continuing in both negotiated-deal and no-deal scenarios. This has been confirmed by the European Commission and is consistent with our understanding. These GIs should continue to have the same level of protection.

For the future protection in the UK of both UK and other countries’ GIs through the withdrawal Act, we have agreed to establish our own GI scheme, which will be very similar to the EU scheme—a good scheme, to echo the point of my noble friend Lord Deben. This was confirmed in the White Paper. The scheme will provide a simple set of rules giving all 87 of our GIs continued protection in the UK when we leave the EU. The independent scheme will be established in both a no-deal and a negotiated-deal scenario. It will be open to new applications from both UK and non-UK applicants from day one, and it will fulfil our obligations under the WTO agreement on trade-related aspects of intellectual property.

In the rest of the world—again, as I confirmed last time—we are working with our global trading partners to transition the EU trade agreements, including ongoing obligations towards, and recognition of, our GIs.

While existing UK GIs will automatically remain protected whether we reach an agreement or not, existing EU GIs in the UK do not automatically benefit. As the House is aware, the withdrawal agreement with the EU means that all existing EU GIs will get the same level of protection as now until a future economic partnership agreement between the UK and the EU comes into force. The potential long-term protection of existing EU GIs would, therefore, not be determined then but as a result of the future economic partnership. This amendment, which proposes a reciprocal agreement, would, therefore, prejudice the negotiation. Furthermore, by requiring a reciprocal system of mutual recognition, it would tie the UK into accepting EU GIs created in the future. That would mean that the UK would be forced to protect successful EU GI applications without the ability to assess them ourselves.

As I emphasised earlier, not agreeing to a reciprocal arrangement would have no consequences for the protection in the EU of existing UK GIs, which should enjoy continued protection after exit regardless. In summary, therefore, we believe fundamentally in the importance of GIs, particularly for the agricultural community, but if this amendment passes it will remove the flexibility necessary for the UK to successfully negotiate new trade relationships outside the EU.

Additionally, I have assured noble Lords that the desire of UK GI producers for continuity of recognition and protection is fully acknowledged and is a key priority for us. In that context, the comments of the European Union grant us additional assurance that they will continue to be protected. On that basis and in the light of the negotiation of the future economic partnership, but with the absolute conviction that we are committed to UK GIs, I ask the noble Lord to withdraw this amendment.

[Lord Tyler]

My Lords, I have listened with great interest to what the Minister has said. There is a simple trade-off here. She said that if we were to pursue the declaratory proposed new clause, it would reduce flexibility. The more flexibility there is in a case such as this, the less one can be sure and confident that the situation is going to continue to protect in the way that my noble friend Lord Stevenson—I think that I can call him that on this occasion—and I would like. Various producers in the UK want that continuity as a certain guarantee for the future. However, we will read with care in the Official Report what the Minister has said and see whether further action may be needed. In the meantime, I beg leave to withdraw the amendment.

Yemen: UK Arms Sales to Saudi Arabia

Baroness Fairhead Excerpts

Wednesday 20th February 2019 Lords Chamber

[Lord Tunnicliffe]

To ask Her Majesty’s Government, following the publication of the report by the International Relations Committee Yemen: giving peace a chance on 16 February, what plans they have to reassess the sale of arms to Saudi Arabia.

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, we welcome the House of Lords International Relations Committee’s report on Yemen, and thank the committee for engaging on this hugely important issue. The UK is doing all it can to help the parties to find a way to end this devastating conflict, and the Government will respond to the report in due course. With regard to arms export licensing, the Government take their responsibility very seriously, and will not grant a licence if to do so would be inconsistent with the consolidated EU and national arms export licensing criteria. We rigorously assess every application on a case-by-case basis against the consolidated criteria, drawing on all available information. The consolidated criteria set out the policy framework for assessing export licence applications, and they remain as announced to Parliament in a Written Ministerial Statement of 25 March 2014.

[Lord Tunnicliffe (Lab)]

My Lords, the Government say that they are narrowly on the right side of international law in licensing arms sales to Saudi Arabia—but the International Relations Committee, which has just been so praised, says that they are narrowly on the wrong side of international law, as these weapons are:

“highly likely to be the cause of significant civilian casualties”.

As this appears to be a fine line, what specific evidence would the Government need from the UN, investigators and NGOs to be pushed over the edge and deem those arms sales illegal?

[Baroness Fairhead]

My Lords, I agree with the noble Lord that this is a very finely balanced decision; there are respectable arguments on both sides. The Government remain confident that we are compliant with our obligations under the Arms Trade Treaty. The key criterion here, of course, is that there has to be a clear risk that the items might be used for serious violations of international humanitarian law in the future. In terms of the sources that we use, in a recent judicial review the court was very clear that there were significant qualitative differences between the risk analysis that the Government could undertake—the information that we got—and the information supplied to NGOs.

[Lord Howell of Guildford (Con)]

My Lords, I am grateful to the noble Lord, Lord Tunnicliffe, for referring to the report of your Lordships’ Committee on International Relations, and to my noble friend for her reply, but will she undertake, given that this is probably one of the largest and most horrific humanitarian disasters of recent times and given our involvement because of our export supplies, to use all leverage, including possible suspension of arms export licences, to put pressure on all parties—I emphasise, all parties—to the Stockholm agreement to hold the ceasefire, get the food sitting on the docks of Hodeidah to the starving millions and discourage further outbreaks of violence and bloodshed in this appalling situation, which all of us have a responsibility to do everything we can to halt?

[Baroness Fairhead]

I thank my noble friend for that question and for chairing the committee. It is, as the Secretary-General of the UN has said, one of the worst humanitarian crises. We keep export licences under close and continual review, and we undertake to continue to do that. In terms of the peace process, we are doing all we can to find an end. Our Foreign Secretary and US Secretary of State Pompeo co-hosted a meeting of the Yemeni quad. Our commitment to a peace process, which is at a critical juncture, is absolute, and we are putting our full weight behind the UN peace process, including additional contributions to support the facility. We have also been active in lobbying the international community on rapid, safe, unhindered humanitarian access to the ports, as my noble friend asks.

[Lord Purvis of Tweed (LD)]

My Lords, I have the pleasure of serving on the committee under the noble Lord, Lord Howell, and I returned from a visit to the wider region yesterday. Since the war began there, the UK has sold £5.5 billion-worth of arms to the coalition, which includes training in targeting and weapons use. I visited Sudan, where there have been an estimated 14,000 militia—including, the UN has verified, nearly 1,000 child soldiers—in the conflict. It is simply not acceptable for the United Kingdom to be satisfied that we are even narrowly on the right side of international humanitarian law. The situation is so severe and the situation is now so tense with the peace process that, for the United Kingdom to give the moral leadership which we currently do by humanitarian assistance and diplomatically, we can no longer effectively turn a blind eye to the need for a pause on arms exports to Saudi Arabia and the Emirates. That will provide the moral leadership so that we can be fully on the right side of international humanitarian law.

[Baroness Fairhead]

I can assure the House that we are taking this extremely seriously: this is a really significant issue. In terms of the information and assessments we use, we regularly look at various strands and all the analysis to make our judgment. The noble Lord referred to targeting. We are also ensuring that advice is there so that the lessons we have learned from previous conflicts are used and civilians are not targeted. I can assure the House that we will be doing everything we can to continue to support the peace process and the much-needed humanitarian aid. We have already contributed £570 million since 2015. We have just committed to a further three years of almost £100 million to support child malnutrition. We understand the seriousness of this, and we are actively working at all levels.